CISI UAE FRR Investment Products and Markets 2

Question 1

What distinguishes NASDAQ Dubai from the Dubai Financial Market (DFM)?

Accepted Answer

NASDAQ Dubai operates within the DIFC under DFSA regulation, while DFM is SCA-regulated

Answer

NASDAQ Dubai operates within the Dubai International Financial Centre under DFSA regulation, while DFM operates under federal SCA regulation, giving them different regulatory frameworks.

Question 2

What is the role of market makers on UAE stock exchanges?

Accepted Answer

To provide continuous buy and sell quotes to enhance market liquidity

Answer

Market makers on UAE exchanges provide continuous two-way quotes (bid and ask prices), enhancing liquidity and enabling smoother trading by ensuring there is always a counterparty available.

Question 3

What is the minimum capital requirement concept for UAE brokerage firms?

Accepted Answer

Brokerage firms must maintain prescribed minimum capital to ensure financial stability and client protection

Answer

The SCA requires brokerage firms to maintain minimum capital levels to ensure they have sufficient financial resources to meet their obligations and protect client assets.

Question 4

What type of collective investment scheme is most commonly offered to retail investors in the UAE?

Accepted Answer

Open-ended mutual funds

Answer

Open-ended mutual funds are the most common collective investment schemes available to retail investors in the UAE, offering diversification, professional management, and daily liquidity.

Question 5

What is the purpose of the investor protection fund maintained by UAE exchanges?

Accepted Answer

To compensate investors for losses caused by broker default or fraud

Answer

The investor protection fund provides compensation to investors who suffer losses due to broker default, bankruptcy, or fraudulent activities, maintaining confidence in the market.

CISI UAE FRR Practice Test

CISI UAE FRR Practice Test

CISI UAE FRR Investment Products and Markets 2