The Business Year

Search
Close this search box.
HE Abdullah Salem Al-Turifi

UAE, ABU DHABI - Finance

In Stock

CEO, Securities & Commodities Authority (SCA)

Bio

HE Abdullah Salem Al-Turifi graduated in Policy and Business Administration and has a Diploma in Banking from the US. His career has included positions of increasing seniority in the finance sector, as well as several prominent governmental positions, including Assistant Undersecretary for Economic Affairs at the Ministry of Economy & Trade. In addition to his position as CEO of the Securities & Commodities Authority (SCA), he is also the First Secretary General of the Union of Arab Securities Authorities based in the UAE.

"The SCA has worked on a package of regulations since the crisis to remove hindrances to volume growth."

What strategy is the Securities & Commodities Authority (SCA) employing to attract foreign investors to the exchanges?

Cross-border investment into the UAE stock exchanges is based on trusting that the exchanges are properly regulated, protected from market abuse, and capital is allowed to flow freely. Gaining investor trust takes years, especially when a significant amount of money is in the balance and this is a pre-requirement, even before the expectation of reaping stock market profits materializes. While stock market performances are left to investors’ expectations of listed companies’ profitability, the SCA has been working to provide a level playing field in line with international best practices. In this sense, the SCA has been active in reviewing several elements that can enhance market functioning: delivery versus payment (DVP) settlement has been introduced for improved safety of execution, eXtensible Business Reporting Language (XBRL) was introduced to enhance the transparency of disclosure, a new funds regime was introduced to enhance and encourage investment recipients that would lead to an improved institutional investment presence in the Emirati capital markets, along with market maker, short selling, and securities lending and borrowing regulations to improve market depth. All these new regulations constitute a regulatory framework that is welcoming for foreign investors, who mainly look for opportunities, which the local capital markets have, and the safety of their investments, which is satisfied through a full regulatory framework. The successful passing and implementation of all these regulations, coupled with the relentless efforts of the SCA and its strategic partners, led to the recent upgrade to “Emerging Market” status by the MSCI index, which will also lead to the greater attraction of foreign investors to the local exchanges.

What can the SCA do to ensure the UAE’s exchanges are more reflective of the national economy?

As the UAE diversifies its economy away from hydrocarbon-based industries, those expanding sectors should gradually produce companies eligible for listing. In other words, the macro trend in the UAE is favoring a gradual expansion in the mix of listings. In the short term, however, achieving a better representation of the national economy output in stock market composition remains an issue of market microstructure: market depth and liquidity, settlement methods, data disclosure, and transparency. On this subject, the SCA has been active to ensure that the regulations are in place to facilitate and, where appropriate, enforce good market functioning. Even during the past years of a global decrease in trading volumes, the SCA has kept a long-term perspective and successfully implemented key regulations.

“The SCA has worked on a package of regulations since the crisis to remove hindrances to volume growth.”

How did the SCA manage to succeed in overcoming the attrition of trading volume in the UAE?

The downtrend in trading volume has been present across global markets, and the UAE is no exception. The SCA has worked on a package of regulations since the crisis to remove hindrances to volume growth. The bulk of such regulations has been issued in 2012 and has the objective to facilitate trading between market participants, allowing brokers to apply for a market-making license, which entails a series of privileges aimed at resulting in tighter bid-ask spreads as well as better market depth. Another approach has been to focus on attracting institutional investors, which internationally provide a substantial percentage of trading volume, while in the UAE institutional investors are on the ascendency trend.

How is the SCA currently working to boost the local securities markets?

The SCA has diligently overseen the UAE’s capital markets via the use of best international practices. One of the key methods to boost the local securities markets has been the SCA’s adherence to global best practices in order to protect investors and improve the efficiency of the UAE’s capital markets through the development of the necessary supervisory regulations. Secondly, the SCA’s close relations with the industry, investors, and stakeholders has allowed for the quick identification, resolution, and issuance of regulatory requirements. As a regulator, SCA has approved and guided 133 entities and companies to list on both the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) as well as supervise and oversee a substantial increase and subsequent consolidation of a significant number of brokerage houses. Other key milestones include the SCA’s contribution to the improvement of the educational awareness of both institutional and retail investors including on-going training workshops that have been conducted by the SCA on a regular basis discussing the implementation of SCA codes and laws to market participants. The SCA has also played an important role in assisting market participants in setting-up as well as advising on corporate governance, including the direct oversight and development of structural and technical governance issues related to internal audit committees, compensation committees, and internal governance.

Sukuk sales are rapidly increasing in popularity in the UAE. How does the SCA regulate Islamic bonds? And what steps are being taken to safe guard against a quick self off?

SCA currently has regulations that cover the listing of Islamic bonds and sukuks. These are contained in Decision No. (93/r) of 2005 concerning the listing of Islamic bonds and Decision No. (94/r) of 2005 concerning the listing of debt securities. These regulations require that all issues of Islamic bonds offered through public subscription are first authorized by the SCA, and such securities are approved by a sharia committee approved by the SCA, and that they comply with the requirements of the Central Bank before listing on any of the licensed stock exchanges. The SCA is currently working on expanding and developing these regulations to cover all stages from issuance through listing, trading, clearing, and settlement and continuing listing requirements. This will ensure the support of an efficient trading infrastructure that is key for the development of both the primary and secondary markets for sukuks in the UAE. The SCA is committed to providing a supportive and conducive regulatory environment that supports innovation and growth in the Islamic capital markets in the UAE, while ensuring the interests of both issuers and investors are protected. The new regulations will be built on several key propositions that will provide an impetus for a sustainable sukuk market in the UAE. These include the continuous availability of liquidity through the participation of a broad and diverse range of investors—both retail and institutional—as well as other key market participants such as market makers and ensuring that appropriate governance and investor protection measures are in place to protect the interests of issuers and investors alike, paying due attention to the very important elements of disclosure and transparency. These measures will ensure the maintenance of an orderly, efficient, and transparent market that will withstand changing market conditions. The new regulations will be developed through an exercise of benchmarking against the best international practices, which ensure that the UAE’s sukuk markets will be sufficiently attractive to global players.

In recent times there has been speculation about the merger of the DFM and the ADX. Is there anything new on this issue, and what are your comments as the supervisory body for this merger?

Undoubtedly, everybody wants to see, as soon as possible, a unified UAE market, which reflects the second biggest market in the region. For our part, we are ready and capable of dealing with the situation. If the two markets are merged into one it will have many advantages, although the SCA has not seen any negative aspects in the current situation of having two markets. On the contrary, the current market situation has ignited positive competition between the two markets to give out the best services to investors. Generally, the SCA welcomes and supports the merger decision. There are technical, administrative, and logistical preparations to be made first before the merger is completed, and we are ready for whatever decision that may be made in this regard.

© The Business Year – July 2013

ADVERTISEMENT

ADVERTISEMENT

You may also be interested in...

AD23_EC_Eltizam_pic

UAE, UAE, ABU DHABI - Economy

Chris Roberts

Interview

Group CEO, Eltizam Asset Management Group

AD23_EC_CBC_pic_2

UAE, UAE, ABU DHABI - Economy

Dhia Hussain

Interview

Chairperson, Canadian Business Council Abu Dhabi (CBCAD)

View All interviews

Countries

Countries

Become a sponsor