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

The National Investor Number (NIN) is a unique identification assigned to each investor registered with the UAE exchanges, required for trading, settlement, and custody of securities on ADX and DFM.

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

DVP ensures that the transfer of securities and the payment of funds occur simultaneously, eliminating the settlement risk that one party fulfills their obligation while the other defaults.

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

UAE securities are held in dematerialized form in the central depository of the respective exchange (DFM or ADX), registered in the individual investor's name, completely segregated from broker proprietary assets.

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

The SCA regulates margin trading through: approved margin account requirements, minimum initial and maintenance margin ratios, margin call procedures and timeframes, concentration limits, and approved securities lists for margin trading.

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

The SCA has established a regulated securities lending framework specifying eligible participants, approved counterparties, collateral requirements, lending period limits, and reporting obligations to facilitate market efficiency.

SCA Practice Test

SCA Practice Test

SCA Securities Trading and Market Operations 2