SCA Securities Trading and Market Operations 2

Question 1

What is the investor account (NIN) system used by UAE exchanges?

Accepted Answer

A National Investor Number uniquely identifying each investor across UAE exchanges, required for trading and holding securities

Answer

A social media account

Answer

An optional registration

Answer

A bank account number

Question 2

What is Delivery Versus Payment (DVP) and why is it important?

Accepted Answer

A settlement mechanism ensuring simultaneous exchange of securities and payment, eliminating the risk that one party delivers without receiving consideration

Answer

Delivery before payment

Answer

Payment before delivery

Answer

Neither delivery nor payment is guaranteed

Question 3

What custody arrangements does the SCA require for investor securities?

Accepted Answer

Securities are held in a central depository (DFM or ADX) in the investor's name, segregated from broker assets

Answer

Securities are held by the broker

Answer

No custody requirements exist

Answer

Investors hold physical certificates

Question 4

What margin trading regulations does the SCA enforce?

Accepted Answer

SCA regulates margin trading through approved broker margin accounts, specified margin requirements, margin call procedures, and position limits

Answer

Margin trading is prohibited

Answer

Any amount of leverage is permitted

Answer

Margin trading is unregulated

Question 5

What is the SCA regulation on securities lending and borrowing?

Accepted Answer

A regulated framework allowing institutional securities lending with SCA-approved counterparties, collateral requirements, and reporting obligations

Answer

Securities lending is prohibited

Answer

Securities lending is unrestricted

Answer

Only government securities can be lent

Question 6

What is the role of the clearing house in UAE securities transactions?

Accepted Answer

The clearing house acts as the central counterparty (CCP) guaranteeing trade settlement, managing counterparty risk, and ensuring the integrity of securities transactions

Answer

Clearing houses only store records

Answer

No clearing house exists in UAE markets

Answer

Clearing is done by individual brokers