The UAE’s markets regulator, the Emirates Securities and Commodities Authority (SCA), is working on introducing regulations to drive the development of the local exchanges.
“The regulators are working diligently to create the infrastructure that is needed to develop the markets,” says Maryam al-Suwaidi, deputy chief executive officer for legal affairs, issuance and research at SCA. “We need to make some big regulatory changes in order to attract more investors, but I’m confident that 2011 will be the year for such change.”
SCA plans to introduce regulations for the following activities by 2012: Delivery versus payment (DVP); short-selling; market-making; securities lending and borrowing; mergers and acquisitions (M&A); derivatives; and global depository receipts (GDRs).
Al-Suwaidi says emphasis is being given to short-selling, market-making and securities lending and borrowing, but that the delivery versus payment (DVP) law is being prioritised.
“This is the most important one because we need it in order to be upgraded to an emerging market by the MSCI,” she says. “So this comes first.”
In June this year, global index provider MSCI renewed its ‘frontier’ status for the UAE, ending hopes of an influx of around $5bn in foreign capital according to some analyst estimates.
“We need to equip investors with the products needed to cope with international changes and crises if they arise,” says Al-Suwaidi.
“But I’m confident that our potential to become an emerging market is greater than ever as we are making good progress. We have just finalised two pieces of regulation: The investment funds act and the investment adviser act.”