SCA Market Surveillance & Manipulation 2

Question 1

What is 'short selling' and how is it regulated in the UAE?

Accepted Answer

Selling securities you do not own, with the aim of buying them back at a lower price; regulated by the SCA with strict rules

Answer

Short selling involves selling securities not currently owned, expecting to profit from a price decline by buying them back cheaper. The SCA regulates short selling with rules on covered vs. naked short selling, disclosure, and conditions to prevent abusive practices.

Question 2

What is 'cornering the market'?

Accepted Answer

Acquiring sufficient control of a security or commodity to manipulate its price by controlling supply

Answer

Cornering the market means gaining monopolistic control over a security or commodity so that one party can dictate prices. It is a serious form of market manipulation prohibited under UAE securities law.

Question 3

What is the SCA's approach to cross-market manipulation?

Accepted Answer

It cooperates with other regulators domestically and internationally to address manipulation that spans multiple markets or jurisdictions

Answer

The SCA cooperates with other UAE regulators (Central Bank, Insurance Authority) and international organizations (IOSCO members) to address market manipulation that may involve multiple markets or cross-border activities.

Question 4

What obligation do licensed brokers have regarding suspicious trading activity?

Accepted Answer

Brokers must report suspicious trading activity to the SCA and relevant authorities

Answer

Licensed brokers have a mandatory obligation to report suspicious trading activity that may constitute market manipulation or other violations to the SCA. This surveillance obligation is a key part of market integrity.

Question 5

What is the consequence of market manipulation on investor confidence?

Accepted Answer

It undermines investor confidence and damages market integrity, reducing participation and market efficiency

Answer

Market manipulation undermines investor confidence by creating unfair markets where prices do not reflect genuine supply and demand. This damages market integrity, deters investment, reduces liquidity, and harms overall economic development.

SCA Practice Test

SCA Practice Test

SCA Market Surveillance & Manipulation 2