SCA Securities Trading and Market Operations — Questions and Answers
Question 1: What are the trading hours for UAE securities exchanges?
- 24-hour trading
- Pre-opening session followed by continuous trading from 10:00 AM to 2:00 PM UAE time (Sunday to Thursday) (Correct answer)
- Same as New York Stock Exchange hours
- Trading occurs only three days per week
Correct answer: Pre-opening session followed by continuous trading from 10:00 AM to 2:00 PM UAE time (Sunday to Thursday)
UAE exchanges operate Sunday to Thursday with a pre-opening session for order entry, followed by continuous trading from 10:00 AM to 2:00 PM UAE time, with a closing auction session.
Question 2: What is the T+2 settlement cycle used by UAE exchanges?
- Trades settle instantly
- Securities trades settle two business days after the trade date, with delivery of shares and payment of funds occurring simultaneously (Correct answer)
- Settlement takes two weeks
- T+2 means two months
Correct answer: Securities trades settle two business days after the trade date, with delivery of shares and payment of funds occurring simultaneously
T+2 settlement means that the final exchange of securities (delivery) and cash (payment) occurs two business days after the trade execution date, using the delivery versus payment (DVP) mechanism.
Question 3: What types of orders can investors place on UAE securities exchanges?
- Only market orders
- Market orders, limit orders, stop orders, and special condition orders (fill-or-kill, immediate-or-cancel) (Correct answer)
- Only buy orders
- Order types are not standardized
Correct answer: Market orders, limit orders, stop orders, and special condition orders (fill-or-kill, immediate-or-cancel)
UAE exchanges accept various order types: market orders (execute at best available price), limit orders (execute at specified price or better), stop orders (triggered at specified price), and special conditions like FOK and IOC.
Question 4: What are the SCA regulations on short selling in UAE markets?
- Short selling is completely prohibited
- Regulated short selling is permitted under specific SCA rules including borrowing securities, disclosure requirements, and market maker exemptions (Correct answer)
- Short selling is unrestricted
- Only institutional investors can short sell
Correct answer: Regulated short selling is permitted under specific SCA rules including borrowing securities, disclosure requirements, and market maker exemptions
The SCA has established a regulated short selling framework requiring securities borrowing arrangements, position disclosure requirements, uptick rules, and specific exemptions for market makers performing liquidity functions.
Question 5: What is the role of market makers on UAE exchanges?
- Market makers set the listing price
- Provide continuous two-way quotes (bid and ask) to enhance market liquidity, reduce spreads, and facilitate smoother trading for designated securities (Correct answer)
- Market makers only trade for their own profit
- Market makers are government employees
Correct answer: Provide continuous two-way quotes (bid and ask) to enhance market liquidity, reduce spreads, and facilitate smoother trading for designated securities
SCA-licensed market makers provide continuous two-way price quotes for designated securities, enhancing liquidity, narrowing bid-ask spreads, and ensuring trading continuity, operating under specific SCA obligations and incentives.
Question 6: What circuit breaker mechanisms exist on UAE exchanges?
- No circuit breakers exist
- Price limits and trading halts triggered when security prices move beyond specified percentages (typically 10-15%) to prevent excessive volatility (Correct answer)
- Circuit breakers only apply to individual stocks
- Trading never stops once it begins
Correct answer: Price limits and trading halts triggered when security prices move beyond specified percentages (typically 10-15%) to prevent excessive volatility
UAE exchanges implement circuit breakers that halt trading when stock prices move beyond specified percentage limits (typically 10-15% from the reference price), preventing panic selling or buying and allowing orderly market conditions.
SCA Securities Trading and Market Operations
What are the trading hours for UAE securities exchanges?