SCA Investment Advice Licensing

Question 1

What is investment advice under UAE SCA regulations?

Accepted Answer

A personalized recommendation to a specific client regarding the merits of investing in a specific financial instrument, made by a licensed advisor

Answer

Any recommendation to buy or sell, regardless of who makes it

Answer

General market commentary published in newspapers

Answer

Advice given by friends about stocks

Question 2

Which categories of investment service require SCA licensing?

Accepted Answer

Brokerage, investment management, investment advisory, market making, and other services defined by SCA regulations

Answer

Only brokerage services

Answer

Only fund management

Answer

Only services provided by foreign firms

Question 3

What is a 'discretionary investment management' service?

Accepted Answer

A service where the investment manager makes investment decisions on behalf of the client without requiring approval for each transaction

Answer

A service where the client makes all investment decisions

Answer

A fund that tracks an index automatically

Answer

A robo-advisory service only

Question 4

What information must an SCA-licensed investment advisor provide to a client before providing advice?

Accepted Answer

Their license number, the nature of services offered, fee structures, conflicts of interest, and risks involved

Answer

Only the potential profit of the investment

Answer

Only their name and contact details

Answer

No information is required before advice

Question 5

What does 'suitability' mean in investment advisory compliance?

Accepted Answer

The requirement to recommend only investments appropriate for the client's financial situation, objectives, risk tolerance, and knowledge

Answer

That the investment strategy is fashionable

Answer

That the advisor has a suitable office

Answer

That the investment has performed well historically

Question 6

What is a 'conflict of interest' in investment advisory services?

Accepted Answer

A situation where the advisor's personal interests may compromise their duty to act in the client's best interest

Answer

When two clients have similar objectives

Answer

When a client disagrees with the advisor's recommendation

Answer

When the market goes against the advisor's recommendation