Approval of the mechanism for calculating the solvency standards of the management company and the investment manager

11-05-2019 Media in\ Abu Dhabi

The Board of Directors of the Securities and Commodities Authority (SCA) held its ninth meeting at its headquarters in Dubai under the chairmanship of Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of the Board.

During the meeting, the Board adopted the study on the solvency criteria of the management company and the investment manager, with a time limit for companies to adjust their positions.

The Board’s decision on solvency standards included nine articles covering the scope of application and capital adequacy, credit risk, operational risk, market risk / managed assets, risk management and control, sanctions, reconciliations and the validity of the resolution.

The meeting discussed a number of initiatives aimed at developing the system of activities and financial services related to the securities sector in the UAE to match the best international standards and practices.

The Board of Directors of the Authority, at its eighth meeting, held its sixth session last March to conduct a study showing the commitment of the licensed management companies and investment managers to the criteria of solvency and the burdens that these companies will bear in the event of applying the proposed standards.

The study, which was prepared by the Authority in this regard, revealed that, in terms of the extent to which licensed management companies and investment managers are currently required, there are no provisions regarding the solvency standards binding on these companies to date. There is also no additional charge imposed on these companies due to the application of the proposed standards.

The objective of the study is to set the standards of solvency of the management company and the investment manager. Protecting the assets of the investors and enhancing the stability of the financial system through the supervision of systemic risks at the company level, which is a basic requirement of the Financial Stability Board / FSB This is reflected in the strategic plan of the Authority and in particular the systemic risk index.

The proposed project is complementary to the regulations of the Authority. Article 22 of Article 26 of the Chairman’s Decision No. 9 / R / M of 2016 on the Investment Funds Regulations provides that “the management company shall be committed to maintaining the financial solvency required to carry out its activities To achieve its ability to meet its obligations in accordance with the standards issued by the Commission in this regard. “

The Board reviewed a study prepared by the Authority’s management on the regulation of asset-backed securities / securitization issues, whereby the company / the originator / the sale and transfer of the individual or consolidated assets to a special purpose enterprise (SPV) Limited liability for the issue of securities – negotiable – backed by these assets called / ABS-backed securities / and in coordination with the competent authorities in respect of the amendments to the relevant legislation to allow the issuance of regulations for those products.

The Council also directed a study to regulate the transfer of the jurisdiction of the financial and monetary brokerage companies and study the organization of the activity of these companies in coordination with the Central Bank “. This should be carried out through a plan of action that enables these companies to be under the jurisdiction of the Commission after providing the appropriate legal cover with the study of burdens Which result from the commissioning of the regulatory and supervisory functions of these companies.

The Board reviewed a report on the financial analysis of listed public companies and sectors in the Abu Dhabi and Dubai Financial Markets from the audited annual financial statements for 2018, followed up the situation of companies and took the necessary procedures in accordance with the law and regulations, as well as a report on the financial analysis of brokerage companies licensed in Abu Dhabi markets And Dubai Financial Services, which disclosed its annual financial statements for 2018.

The Board of Directors also reviewed a report on the relationship of the Authority with related entities, primarily the Office of the Prime Minister, the Central Bank, the Ministry of Economy, the Ministry of Finance, the Ministry of Justice, the Ministry of Interior, the Emirates Competitiveness Authority, the Federal Authority for Human Resources and the Economic Development Departments of the UAE, the Abu Dhabi and Dubai Financial Markets and the Dubai Gold and Commodities Exchange , Brokerage firms, DFSA / ADGM /, educational institutions, the International Organization of Securities Commissions (IOSCO) and other international and regional bodies, including counterpart bodies, from 1 July And 31 December 2018.

The Council also reviewed a memorandum on the hosting of the 45th Annual Conference of the International Organization of Securities Commissions (IOSCO) for the year 2020 which is being held in the Emirate of Dubai. The Board of Directors of the Commission has taken necessary measures regarding the preparations and progress of the conference arrangements. UAE with the necessary funds.

At the beginning of the meeting, the Council was briefed on the minutes of the eighth meeting of the sixth session and followed up the implementation of the resolutions and recommendations issued during it and decided to adopt it.