UAE FRR Glossary: 154 Terms in Plain English

A

Abu Dhabi Securities Exchange (ADX): A UAE securities market whose rules, as tested, cover E-Trading through brokers, remote access by foreign brokers, broker reporting, debt instrument trading, big block deals and clearing, settlement and depository work through its CSD Department. ADX brokers file audited quarterly reports within 45 days and audited annual statements within 90 days. See also: E-Trading, Big block deal, CSD Department. Chapter 7
Administrative penalties (AML): Sanctions a supervisory authority imposes itself for AML/CFT breaches by financial institutions or DNFBPs. They range from a warning and a fine between AED 50,000 and AED 5,000,000 per violation, through a sector ban, limits on managers' powers and restriction or suspension of activity, to licence cancellation. Regular reports on corrective steps may also be required. See also: Money laundering penalties, Federal Decree-Law No. 20 of 2018. Chapter 5
Appropriateness: The test for execution-only business in non-complex products. It looks at the client's knowledge and experience, past transactions, education and profession, but not their capacity to bear losses. The report states the product, the result and the reason. With too little information the firm refrains; if a warned client insists, it complies and keeps evidence. See also: Suitability, Execution-only business. Chapter 6
Article 17 sanctions: The SCA Rulebook penalties for licensed bodies: a notice, a fine of up to AED 100,000, suspension for up to one year (two months for an approved employee), or cancellation on a listed ground such as forged documents, unpaid fees or fines, or no licensed activity within six months. Cancellations appear in two UAE daily newspapers, one in Arabic. See also: SCA Rulebook. Chapter 2
At-the-close order: A DFM order condition under which the order lapses when that day's trading session closes. Whatever remains unfilled at that point is deleted from the system automatically rather than rolling over, so the investor has to enter a fresh order to keep trying. See also: Day order. Chapter 8
Authorised agent: The ETF party that maintains permanent bids and offers in the market so the units stay liquid, and swaps units for index assets with the manager. The gap between the prices at which it sells and buys must stay within the agreed spread stated in the prospectus, which is a different figure from the maximum deviation from the index. See also: Exchange-traded fund (ETF). Chapter 3

B

Beneficial owner: The natural person who really owns or controls a customer, found by looking through every corporate layer. The exam rules start with anyone whose controlling ownership interest, held alone or with others, is 25% or more. If that person cannot be verified, the firm verifies the customer's senior management officers instead, using reliable sources of information. See also: Customer due diligence (CDD). Chapter 5
Big block deal: An ADX trade covering at least 1% of the issuer's capital, with one person on one side and up to ten on the other, priced within 25% of the previous close unless ADX waives a condition. It does not affect the closing price, index or highs and lows, and commission uses the higher of deal price and previous close. See also: Abu Dhabi Securities Exchange (ADX). Chapter 7
Broker representative: A registered employee entering orders for a brokerage firm; on DFM, except clients using permitted online facilities, only people on the firm's register of representatives may do so. In the SCA Rulebook it is the approved job paired with the trading broker activity. Staff normally deal for themselves via their own firm, with written approval from its manager and DFM. See also: Category 1: Dealing in Securities, Brokerage firm (DFM). Chapter 8
Brokerage firm (DFM): A firm dealing on DFM for clients. It must keep the solvency the SCA's criteria require, report material developments and staff breaches to DFM, run each licensed activity through its own department, and never publish information it knows to be wrong about listed companies. Client orders and their backups are kept for ten years. See also: Dubai Financial Market (DFM), Trading member, Client agreement. Chapter 8
Business combination: The merger or acquisition that completes a SPAC's purpose. It needs a 75% vote of the shares represented at the assembly plus Authority approval, and the target's fair market value must reach 80% of the deposited funds after deductions. The deadline is the prospectus period or two years from listing, whichever ends first, extendable to three years from listing. See also: Special purpose acquisition company (SPAC), SPAC escrow account. Chapter 6

C

Cabinet Decision No. 10 of 2019: The implementing regulation of the AML law, setting out the detailed duties: customer due diligence, beneficial ownership, PEP measures, suspicious transaction reporting, reliance on third parties, internal controls, the compliance officer's tasks and record keeping. Its thresholds, such as AED 55,000 for occasional transactions, are the ones the exam uses. See also: Federal Decree-Law No. 20 of 2018, Customer due diligence (CDD). Chapter 5
Cash investment fund: A fund (SCA Decision No. 52/R.T of 2016) passing two tests: highly liquid cash instruments make up at least 90% of assets, and weighted-average maturity is 120 days at most. Debt of one issuer is capped at 10% of net assets, debt needs a BBB+ rating or equivalent, and borrowing is only for redemptions, up to 10% of NAV. See also: Net asset value (NAV). Chapter 3
Category 1: Dealing in Securities: The licence category for carrying out securities trades on clients' behalf, such as acting as a trading broker. Minimum paid-up capital is AED 30 million. Each activity has its own approved job: the trading broker activity uses broker representatives, while the securities dealer activity needs a trading manager. Category 1 firms must also run the Unified Centralised Back Office System. See also: Licence category, Unified Centralised Back Office System, Broker representative. Chapter 1
Category 2: Dealing in Investment: The licence category for managing investment funds and securities portfolios. Under the Rulebook as issued in 2021, which the exam tests, it needed paid-up capital of AED 50 million or more. Its main functions include an Investment Operations Manager, and its approved jobs include Portfolio Manager and, for portfolio management, Financial Analyst. See also: Licence category, Category 1: Dealing in Securities. Chapter 1
Category 3: Custody, Clearing and Registration: The licence category for post-trade work: safe custody, general clearing, issuing covered warrants, acting as depository bank or its agent for depository receipts, and keeping registers for private joint-stock companies. It needed AED 50 million of paid-up capital under the 2021 Rulebook. Only banks, and branches of foreign banks, holding a UAE Central Bank licence may act as depository banks. See also: Licence category, Clearing. Chapter 1
Category 4: Credit Rating Agencies: The licence category for credit rating agencies, with minimum paid-up capital of AED 5 million. Its four main functions are a credit rating analyst, a credit rating analysis official, a compliance officer and a category manager or official. The analyst and the analysis official are separate roles, and a risk management officer cannot stand in for either. See also: Licence category. Chapter 1
Category 5: Arrangement and Advice: The licence category, also called Ranking and Advice, for financial consulting, financial analysis and promotion. Under the Rulebook as issued in 2021, which the exam tests, it had no minimum paid-up capital. Promotion pairs with a Promotion Manager and financial consulting with a Financial Analyst. These firms neither execute trades nor hold client assets. See also: Licence category, Promoter. Chapter 1
Central counterparty (CCP): The clearing body through which a UAE market must settle every exchange-traded derivative trade, instead of the two investors settling directly with each other. Together with margin, it helps manage the danger of a counterparty default. A CCP clearing commodities contracts needs its own SCA licence, with capital, governance and default fund requirements. See also: Derivatives, Commodities CCP, Margin. Chapter 4
Chinese wall: An internal information barrier: what one part of a firm knows is kept from, and not used by, another part whose interests conflict. The rules apply whenever one or more of the areas carries on regulated work or work connected with it, and the firm must keep the barrier effective and monitored, since a policy on paper is not enough. See also: Investment research conflicts. Chapter 5
CISI Code of Conduct: The professional body's code that the syllabus tests. Members must honour both the letter and the spirit of rules and act with integrity. Its principles include Personal Accountability, Client Focus, Conflict of Interest, Respect for Market Partners, Professional Development and Aware of Capabilities, backed by four self-checks: Clear & Honest, Impartial & Open, Informed & Fair, and Straightforward & Transparent. See also: Professional Code of Conduct (DFM). Chapter 1
Clean price: The quoted price of an ADX debt instrument, leaving out accrued interest. The buyer actually pays the dirty price, meaning the clean price with interest accrued to the settlement date added, which the system calculates. Each trading unit is a single instrument at its issue nominal value, and one deal can cover several units. See also: Abu Dhabi Securities Exchange (ADX). Chapter 7
Clearing: The post-trade process that works out each clearing member's net rights and obligations from matched trades so that settlement can follow. On ADX the CSD Department performs it; commodities contracts are cleared by a licensed central counterparty; and general clearing for others is an activity in licence Category 3. See also: CSD Department, Central counterparty (CCP), Settlement. Chapter 7
Clearing member: A firm that settles trades with the market. On ADX it must fund its settlement account by 09:00 on settlement day and post a settlement guarantee as a bank guarantee, cash or both. If it defaults, the cash guarantee is used first, then the bank guarantee, and its pledged securities are sold only as a last resort. See also: Clearing, Settlement, Trading member. Chapter 7
Client agreement: The dated, signed written agreement a DFM broker needs before trading for a client, setting out rights, obligations and account arrangements. A third party may instruct the broker only under an authenticated power of attorney. Orders record date, time, security, quantity, price and expiry; executions are notified when they happen, and statements follow at least every three months. See also: Brokerage firm (DFM), Client order priority. Chapter 8
Client confidentiality: The duty to protect client information. Under the SCA Rulebook disclosure is allowed only on set grounds: a legal requirement, the client's consent, reasonable need to deliver that client's service, information no longer being confidential, or a request from a UAE court or supervisor. DFM brokers may disclose with client permission or on an SCA, DFM or court order. See also: Professional Code of Conduct (DFM), Complaints handling. Chapter 2
Client money: Money a firm holds for clients. It is normally paid promptly into a separately designated client bank account, apart from the firm's own funds. Reconciliations happen as often as necessary and promptly, ideally by someone not involved in keeping the records, and any failure to meet reconciliation requirements must be reported to the regulator without delay. See also: Segregation, Reconciliation. Chapter 6
Client order priority: The DFM principle that client orders come before orders for the broker or accounts it has an interest in, and that comparable client orders are dealt with in the sequence received. The broker must seek the best available price within the client's conditions and may never exploit what it knows of a client's order to get ahead of it. See also: Price-time priority, Client agreement, Insider dealing. Chapter 8
Client reporting: Reports telling clients what the firm did and what it cost. A retail client must receive confirmation of a deal the firm executed no later than the next business day. Periodic statements are normally at least six-monthly, every three months on request, monthly for an authorised leveraged portfolio, and yearly only with deal-by-deal confirmations and no higher-risk investments. See also: Contingent liability transaction. Chapter 6
Close ties: A licensed body's connections with other persons or groups. The firm must report them to the Authority, ensure they never obstruct its supervision, and check that the other party meets the Authority's standards of efficiency and appropriateness. Where a tie hinders supervision, the Authority can require it to be ended or amended and can impose sanctions. See also: SCA Rulebook. Chapter 2
Closed period: A window before key disclosures when a listed company's board members, general manager and insider employees may not deal in its shares: the 15 days before the company discloses its financial statements, or the ten days before it announces other material information. A DFM broker must check that such a client is outside the window before executing. See also: Insider dealing, Price-sensitive information. Chapter 8
Closing session: The last DFM phase of the day, used for data, reports and enquiries. During it brokers cannot enter new orders of any type, or amend or cancel existing ones. Collecting orders and running the closing auction belong to the earlier pre-closing session. See also: Pre-closing session. Chapter 8
Cloud computing: A form of outsourcing with added safeguards. The provider's servers, backups included, must sit inside the UAE; it must not look at the data and must keep it confidential; it supplies a yearly external audit report on data security; and it protects data and backups for ten years. The firm needs an exit strategy moving all data without loss. See also: Outsourcing. Chapter 2
Commodities CCP: A central counterparty licensed by the SCA to clear commodities contracts (Resolution No. 11 of 2015). Capital and reserves must total AED 50 million or more, the licence fee of AED 200,000 is paid in advance, at least one third of the board must be independent with a floor of two, and continuity plans are tested with results made public. See also: Central counterparty (CCP), Default fund, Margin. Chapter 7
Complaints handling: A licensed body's process for receiving, recording, investigating and resolving complaints. Each complaint is logged on arrival, clients receive the procedure free on request, and the employee complained about stays off that service. The client learns the decision by letter on the date it is taken. Referring a complaint elsewhere needs consent, and silence is not consent. See also: Client confidentiality. Chapter 2
Compliance officer: Under the AML rules, the officer who examines possible suspicious transactions and decides on notifying the FIU, reports to senior management every six months, trains staff and co-operates with the supervisor and FIU. In the SCA Rulebook, the compliance officer of a licensed body needs unrestricted access to all records, the board and senior management. See also: Suspicious transaction report (STR), Internal audit, Whistleblowing. Chapter 5
Conciliation: Settling certain public joint-stock company offences, such as breaching governance rules or the rules for calling the general assembly, by paying a prescribed amount instead of being prosecuted (Decision No. 42 of 2015). The application, on the Authority's form, must precede referral to court; a committee decides within 15 working days, and approval plus payment ends the criminal route. Chapter 4
Contingent liability transaction: A transaction that may create further payment obligations, so losses can exceed the sum first committed. A firm managing a client's investments, or operating an account that holds uncovered open positions, must tell the client of losses beyond the agreed limit before that business day ends, or the next one if the breach falls on a non-business day. See also: Client reporting. Chapter 6
Continuous trading session: The DFM phase in which incoming orders match at once against orders resting in the book. A crossing order executes at the resting order's price, not its own limit. A large order works through successive price levels until it is filled or no executable quantity remains, and any unfilled balance stays in the book. See also: Pre-opening session, Market order, Price-time priority. Chapter 8
Corporate Governance Guide: The SCA guide for public joint-stock companies (Chairman's Decision No. 3/RM of 2020), which the board has primary responsibility for applying. Its equity principle means fair treatment of every shareholder, minorities included. Governance records stay at head office for at least ten years, and board members may accept gifts up to AED 500 where no deal or influence is involved. See also: Related-party transaction. Chapter 1
Crude oil futures: DGCX oil contracts. Standard WTI and Brent cover 1,000 barrels with a US$0.01 per barrel tick, and Mini WTI covers 100 barrels. WTI stops four business days ahead of the 25th day of the month preceding delivery; Brent stops on the penultimate business day of the month two months ahead of delivery. Dubai India Quanto Crude Oil covers three barrels. See also: Dubai Gold & Commodities Exchange (DGCX), Tick (minimum price movement). Chapter 7
Crypto asset: For exam purposes, an asset covered by the SCA's 2020 crypto rules (Chairman's Decision No. 23/RM of 2020). The rules split them into security tokens and commodity tokens, the latter covering everything else and becoming regulated commodity tokens on listing. Financial activities in them need Authority approval, untraceable assets may not fund accounts, and exchange crime rules apply. See also: Security token, Crypto asset custodian, Crypto asset exchange. Chapter 4
Crypto asset custodian: A firm holding crypto assets for clients. It keeps them apart from its own assets, holds the same asset in the quantity it owes, never lends client assets, and makes sure no single key holder can fully authorise an action alone. A listing needs a custodian unless the Authority accepts a justified request that custody is unnecessary. See also: Crypto asset, Segregation. Chapter 4
Crypto asset exchange: A platform licensed by the Authority for trading crypto assets. Its continuing licence conditions include recording and reporting trades, constant market surveillance, AML/CFT controls, restrictions on which users may trade, a user risk statement and fees disclosed before orders. Listing applications must cover hacking vulnerabilities and traceability, and exchange crime rules apply to traded tokens. See also: Crypto asset, Market manipulation. Chapter 4
Crypto fundraising: Raising money for crypto asset issues through a licensed platform. Unless the offer is restricted to qualified investors, each client's investment is capped at AED 350,000 or equivalent. Platforms may be run only by an Authority-licensed exchange, a Commercial Companies Law company or an authorised crypto exchange operator, and the offering person may not set the issue price at will. See also: Qualified investor, Crypto asset. Chapter 4
CSD Department: The ADX department that clears and settles trades for clearing members, records changes of ownership by book entry, keeps the central register and investor accounts, and sends payment and receipt orders to settlement banks. It keeps ownership transfer data for at least 15 years. The exam tests this departmental structure as described in the ADX rules. See also: Clearing, Investor number, Pledge. Chapter 7
Customer due diligence (CDD): Verifying a customer's identity, screening against prohibited lists and assessing risk. It applies to every business relationship, to occasional transactions of AED 55,000 or more (linked deals combined), to occasional wire transfers of AED 3,500 or more, and at any amount where crime is suspected or earlier identity data looks doubtful. Incomplete CDD means the firm must not proceed. See also: Ongoing due diligence, Enhanced due diligence, Beneficial owner. Chapter 5

D

Day order: An order valid only for the current trading session: if still unexecuted when the session closes, it lapses automatically. On DFM an order entered without any stated validity is treated as a day order, so a blank validity field never means the order lasts indefinitely. See also: Good-till-cancelled (GTC), Good-till-date (GTD), At-the-close order. Chapter 8
Debt securities: Debt instruments issued, offered and listed under SCA Decision No. 17 of 2014. Unless the Authority decides otherwise, a listing needs an aggregate value of at least AED 10 million. A guaranteed issue must include the guarantor's latest audited accounts, a convertible issue must explain how conversion works, and changes to the terms of publicly offered debt are announced immediately. See also: Delisting, Qualified investor, Sukuk. Chapter 4
Default fund: A pool of resources a commodities CCP keeps fully funded to absorb clearing member defaults. It must be large enough at minimum to absorb the default of its two largest clearing members, each member contributes according to its risk exposure to the CCP, and the fund's adequacy is stress-tested at least daily. See also: Default waterfall, Commodities CCP, Margin. Chapter 7
Default waterfall: The order in which a commodities CCP uses resources after a member defaults: the defaulter's margin, then its guarantee, then its default fund contribution, then the CCP's own skin in the game of at least AED 10 million, and only then other members' contributions, which need the Authority's prior approval. See also: Default fund, Commodities CCP. Chapter 7
Delisting: Removing securities from a market. For a troubled company, the Authority decides after consulting the market and must notify the company within 30 days; later transfers of the shares happen outside the market's systems. For debt securities, a voluntary delisting needs at least 90 days' written notice, and a suspension lasting over six months allows cancellation. See also: First and second category, Debt securities. Chapter 4
Dematerialisation: Turning a paper securities certificate into an electronic holding. The owner or a legal representative requests deposit; the issuer or registrar checks validity, ownership and the requester's identity and capacity, then dematerialises and notifies the CSD, which credits the investor by book entry. Shares held under allotment letters cannot trade on ADX until deposited. See also: CSD Department, Pledge. Chapter 7
Depository Centre: The central depository (SCA Decision No. 19 of 2018). It opens securities accounts, keeps ownership records, registers pledges and liens and ensures final settlement follows the law and market rules, but neither sets prices nor judges suitability. It reports quarterly within 45 days and yearly within three months; issuers send it their shareholder register within one week of listing approval. See also: Settlement, Pledge, CSD Department. Chapter 4
Derivatives: Exchange-traded derivative contracts governed by SCA Decision No. 22 of 2018. The market sets contract details and initial margin and must settle every trade through a central counterparty. These controls manage counterparty and settlement risk but do not cap a holder's losses. A share cannot be deregistered while derivatives based on it are still unsettled. See also: Central counterparty (CCP), Margin. Chapter 4
Designated non-financial businesses and professions (DNFBPs): Non-financial businesses and professions that still carry AML/CFT duties, for instance real estate brokers and agents, precious metals dealers, accountants and lawyers. Banks, insurers and exchange houses are financial institutions instead. Lawyers are exempt from reporting information gained in protected legal work, such as advising on a client's legal position or acting for the client in court, arbitration or mediation. See also: Federal Decree-Law No. 20 of 2018. Chapter 5
Dubai Financial Market (DFM): A UAE securities market whose rules in the syllabus cover brokerage firms' duties, trading and settlement, the Professional Code of Conduct, online trading regulations, order types and order handling. DFM clients have two settlement days to pay for purchases, and only registered representatives, or clients using permitted online facilities, may enter orders. See also: Brokerage firm (DFM), Professional Code of Conduct (DFM), Price-time priority. Chapter 8
Dubai Gold & Commodities Exchange (DGCX): The exchange whose futures contracts the syllabus tests: gold, silver, crude oil, India-linked quanto contracts and equity index futures such as MSCI India. For each you need the contract size, minimum price movement, delivery months, last trading day and final cash settlement method. The gold contracts run on a two-month cycle starting in February. See also: Gold Futures, Crude oil futures, Tick (minimum price movement). Chapter 7

E

E-Trading: The ADX facility through which a brokerage firm's clients enter buy and sell orders electronically. Only brokers approved by ADX may offer it, and they must support the application with reports on their systems and links to the exchange. Controls include mutual authentication and a second factor, so letting someone else use a client's login defeats the rules. See also: Abu Dhabi Securities Exchange (ADX), Remote access. Chapter 7
Enhanced due diligence: Stronger checks applied where risk is higher, scaled to that risk. Examples in the rules include customers from high-risk countries, high-risk legal persons named as life policy beneficiaries, and foreign PEPs, who need sign-off from senior management, steps to establish where their funds come from, and closer ongoing monitoring. A high-risk rating calls for more scrutiny, not automatic refusal. See also: Customer due diligence (CDD), Politically exposed person (PEP), Risk-based approach. Chapter 5
Evaluator: An independent valuer of in-kind shares, licensed or approved for valuation in the UAE, with at least five years' valuation experience and three with that asset type. The fund's own auditor or adviser is barred, and unlisted shares need two Authority-licensed financial advisers. Data may be at most three months old, and the report reaches the Authority first. See also: In-kind shares. Chapter 3
Exchange-traded fund (ETF): A fund (SCA Decision No. 49/R.T of 2016) whose units list on at least one UAE market and track an index with a clear target and liquid components, either by holding every component or a sample meeting the stated correlation. The manager coordinates the service providers, and an administrative services company reviews the daily NAV and the intraday indicative value. See also: Authorised agent, Net asset value (NAV). Chapter 3
Execution-only business: Business where the firm simply carries out the client's own instruction without making a personal recommendation. For non-complex products it brings in the appropriateness standard. It does not take a financially complex product outside the suitability standards, which apply whether the firm advises on the deal or simply executes it. See also: Appropriateness, Suitability. Chapter 6

F

Failed settlement: What happens on DFM when a client who bought securities fails to pay within the two settlement days. With DFM approval the broker must sell the securities at market price by the first working day after settlement. Losses fall on the client and any profit is paid to the Investor Protection Fund. Brokers should confirm ability to pay before settlement. See also: Settlement, Investor Protection Fund. Chapter 8
Fair, clear and not misleading: The standard for every client communication, judged on the overall impression rather than the accuracy of each sentence. It covers retail and professional clients, applied proportionately. A promotion quoting a yield must give a balanced view of short- and long-term prospects, and one for an investment that can fall in value must make clear that capital is at risk. See also: Financial promotion. Chapter 6
Family fund: A local fund established by an entity licensed for family investment management, with units wholly owned by family members or by companies they wholly own. The Authority defines who counts as family, each subscriber must beneficially own all of its own units, and units may never be sold or pledged to anyone outside that group. See also: Local fund, Private fund. Chapter 3
Federal Decree-Law No. 20 of 2018: The UAE's main AML/CFT law as tested in the exam. It defines money laundering and terrorist financing, places duties on financial institutions and DNFBPs, and sets the administrative and criminal penalties, including those for failing to report and tipping off. The exam is based on this law even where later legislation has since changed the rules. See also: Cabinet Decision No. 10 of 2019, Money laundering, Tipping off. Chapter 5
Federal Law No. 4 of 2000: The founding law that created the SCA and the framework for licensing securities and commodities markets. It also deals with clearing, settlement, transfer of ownership, custody and disclosure. Transfers of listed securities follow the market's own regulations, and a deal that is never recorded as those rules require has no legal effect. The exam is based on this law. See also: Securities and Commodities Authority (SCA), Licensed market, Null and void. Chapter 1
Fill-and-kill (FAK): A condition under which the order executes at once for whatever quantity is available at the specified price or better, and any balance that cannot trade immediately is cancelled. Unlike fill-or-kill, it accepts a partial fill. See also: Fill-or-kill (FOK), Immediate-or-cancel. Chapter 8
Fill-or-kill (FOK): An all-or-nothing condition: the entire quantity must execute immediately on entry at the permitted price, or the whole order is cancelled and nothing trades. A partial fill is never accepted under this condition. See also: Fill-and-kill (FAK), Immediate-or-cancel. Chapter 8
Final cash settlement price: The price used to close out a cash-settled DGCX futures contract, generally paid on the next business day. Methods differ: Gold Futures use the last trading day's daily settlement price; Silver uses a published benchmark, or a Clearing Corporation price if none exists; Dubai India Quanto Crude Oil converts the WTI price at the Reserve Bank of India rate. See also: Gold Futures, Crude oil futures. Chapter 7
Financial Intelligence Unit (FIU): The UAE body that receives suspicious transaction reports through its electronic system or another approved channel. It may ask the reporting firm for further information, which must be provided without any court order. It does not approve a firm's AML policies or clear individual customers; those decisions rest with the firm's own senior management. See also: Suspicious transaction report (STR), Compliance officer. Chapter 5
Financial promotion: A communication whose substance and purpose is to encourage investment, whatever heading it carries. Promotions must be clearly recognisable for what they are, as well as fair, clear and not misleading, and any reference to past performance needs a warning that it may not guide future results. A firm stays responsible for promotions its appointed representatives issue for it. See also: Fair, clear and not misleading, Promoter. Chapter 6
First and second category: The two listing categories for troubled companies under SCA Decision No. 13 of 2020. Companies start in the first and drop to the second after a trading suspension of six months or more, or once accumulated losses reach 50% of capital. The market reviews placement yearly on audited accounts and shows second-category shares on a separate screen. See also: Watch list, Delisting. Chapter 4
Fund initial and final approval: The staged licensing route for a local fund. Initial approval is not a licence: the fund may lease premises or open bank accounts, but cannot operate, promote units or take subscriptions on that basis. After subscriptions close, the auditor's certificate is due within 30 days, the licence certificate follows within five days, and investing must begin within 12 months. See also: Local fund, Key Investor Information Document (KIID). Chapter 3
Fund reporting: Each local fund publishes externally audited IFRS financial reports: semi-annual ones within 45 days after the half-year closes and annual ones within three months of year-end, plus an annual performance report. Reports appear in Arabic and English and go to the Authority, and to the market if units are listed. The first financial year lasts six to 18 months. See also: Net asset value (NAV), Local fund, Public fund. Chapter 3

G

General and limited partnership fund: A fund (GP/LP fund) run by one or more general partners, who are fully liable for its obligations, jointly where there are several, alongside limited partners whose liability stops at their share. Its licence expires each 31 December and renewal is requested at least a month ahead. Changes such as a new main business location are notified within seven days. See also: Limited partner. Chapter 3
Gold Futures: The DGCX gold contract of 32 troy ounces, with a minimum price movement of US$0.10 per ounce. The last trading day falls two business days before the delivery month's last business day, and it settles at that day's daily settlement price. Related contracts differ: Shanghai Gold is 1,000 grams and India Gold Quanto is one lot. See also: Dubai Gold & Commodities Exchange (DGCX), Final cash settlement price. Chapter 7
Good-till-cancelled (GTC): An order that remains active from session to session until either it trades or the investor withdraws it. It does not lapse when a session ends, but its long life gives no assurance that it will ever execute. See also: Day order, Good-till-date (GTD). Chapter 8
Good-till-date (GTD): An order that stays valid until the end of a date the investor specifies and then expires if any part is still unexecuted. Unlike a good-till-cancelled order it has a fixed end, and unlike a day order it can outlast the session in which it was entered. See also: Day order, Good-till-cancelled (GTC). Chapter 8

I

Immediate-or-cancel: A DFM order condition that requires immediate execution, with any quantity that cannot trade straight away cancelled. It is the opposite of conditions such as good-till-cancelled or good-till-date, which let an order rest in the book over time. See also: Fill-and-kill (FAK), Fill-or-kill (FOK). Chapter 8
In-kind shares: Shares or other assets handed to a fund in return for units instead of cash (SCA Decision No. 63/R.T of 2019). They must be free of legal disputes and third-party rights. Two evaluators value each asset at fair value and the lower figure counts; units issued may not exceed it. The manager or founders pay valuation costs first. See also: Evaluator. Chapter 3
Initial approval conditions: The tests a licence applicant must pass: financial eligibility, experience and efficiency, honesty and integrity, compliance, professional record, a realistic feasibility study and work plan, adequate resources, and a suitable board and management. The compliance test counts serious violations from the last five years and moderate ones from the last two, in the UAE or abroad. See also: SCA Rulebook, Licence category. Chapter 2
Insider dealing: Trading on undisclosed information gained through one's position. Under the SCA disclosure rules it is punishable by three months to three years in prison, a fine between AED 100,000 and AED 1 million, or both, and the deal is void. DFM rules also treat knowledge of a large pending order as inside information that a broker must not trade on. See also: Price-sensitive information, Closed period, Null and void. Chapter 5
Internal audit: The function that checks, independently, whether a licensed body's rules, procedures and controls are appropriate and effective. The internal auditor must work without interference, may not combine the role with any other job, needs access to records and must be able to approach the board or its committee. Reporting only to the manager being audited breaks that independence. See also: Compliance officer. Chapter 2
Introducer: An approved firm whose role is limited to connecting prospective clients with licensed firms, for the activities named in its approval. It must explain the introduction procedure, its commission and its relationship with each party. Apart from its disclosed commission it must not take client money, assets or orders, and it cannot give financial consultation or analysis unless licensed. See also: Promoter. Chapter 6
Investment research conflicts: Rules protecting research objectivity. A firm must not promise issuers favourable coverage or accept inducements, and must manage pay linked to winning business. Analysts aware of unpublished research may not deal until recipients have had a fair chance to act, other personal deals need prior compliance or legal approval, and draft ratings are shown to others only for legal checks. See also: Chinese wall. Chapter 5
Investor number: The identifier issued by the ADX CSD Department that an investor needs before opening a broker trading account or dealing in listed securities. As a rule each investor has a single number used with all brokers; exceptions include an investor-owned individual institution, and every sub-fund of a parent fund gets its own number. See also: CSD Department. Chapter 7
Investor Protection Fund: The fund that receives any profit when a broker, with market approval, sells securities bought for a client who failed to pay. Under the ADX rule, where the broker took on responsibility for the purchase, the broker bears any loss; under the DFM rule the client bears it. Ordinary sale proceeds belong to the client, not the fund. See also: Failed settlement, Clearing member. Chapter 7
Islamic securities: Securities offered as Shariah-compliant (SCA Decision No. 20 of 2018). The offering document must name each member of the Shariah Supervisory Committee with their qualifications and describe how resources and disposal proceeds would be redirected if Shariah compliance is lost. A foreign issuer also gives the Authority statements on conflicts of law, tax differences and any IFRS against AAOIFI conflict. See also: Sukuk. Chapter 4

K

Key Investor Information Document (KIID): The short summary that accompanies a local fund's offering document. Both are prepared and signed by the fund manager, or by the founders where the fund is self-managed, who answer for their accuracy. Either Arabic or English may be used, and neither document may contain promises, guarantees or misleading statements. Periodic fund reports, by contrast, need both languages. See also: Fund initial and final approval, Fund reporting. Chapter 3

L

Legal person liability: A company whose representatives, managers or agents intentionally commit money laundering or terrorist financing in its name or for its account faces a fine of AED 500,000 to AED 50 million. A terrorist financing conviction also means dissolution and closure of its offices, and a summary of the court's ruling must be published at the company's expense. See also: Money laundering penalties, Terrorist financing. Chapter 5
Licence category: One of the five groups into which the SCA sorts the 21 financial activities it licenses. The activities a business intends to carry on decide its category, and the category then sets conditions such as paid-up capital. A firm may do only what its licence covers, so moving into another category's work needs that licence too. See also: SCA Rulebook, Category 1: Dealing in Securities, Category 5: Arrangement and Advice. Chapter 1
Licensed market: A securities and commodities market licensed by the SCA, organised as a public joint-stock company, or as a local public establishment. It may not trade before licensing, must trade at least five working days a week for two hours a day, records every deal in its listed securities and stays under SCA supervision. Brokers and listed issuers must join it. See also: Federal Law No. 4 of 2000, Special order, Null and void. Chapter 1
Limit order: An order to deal at a set price or better: for a buy order the most the investor will pay, for a sell order the least they will accept. It may never trade if the market does not reach that price. Validity and fill conditions, such as day order or fill-or-kill, can be added separately. See also: Market order, Price-time priority. Chapter 8
Limited partner: An investor in a GP/LP fund whose liability stops at its capital share. Under the individual solvency route, a person qualifies by declaring yearly income of AED 3 million or more, or net equity, home excluded, of AED 7 million, together with adequate knowledge and experience. Being represented by a licensed investment manager is the alternative route. See also: General and limited partnership fund. Chapter 3
Local fund: A fund licensed under the SCA Investment Funds Regulation (Chairman's Decision No. 01/RM of 2023). It may be established by an Authority-licensed fund manager, by a family investment manager as a family fund, or by two or more founders as a self-managed fund. Its licence lasts one year, and renewal is requested at least one month before expiry. See also: Public fund, Private fund, Self-managed fund. Chapter 3

M

Margin: Collateral posted to support a participant's obligations and reduce counterparty risk; it is neither a fee nor a cap on losses. A market sets initial margin for its exchange-traded derivatives, with variation margin covering later changes. A commodities CCP accepts margin only in cash or securities, never bank guarantees, and sets it to a 99% confidence level. See also: Derivatives, Commodities CCP, Default fund. Chapter 7
Market manipulation: Creating a false picture of price, demand or activity, for example through sham trades, orders entered and cancelled to look busy, trades meant to push a price so others follow, or false information. Such dealings are void, and the SCA can fine the investor, bar them from trading for up to one year, or both. See also: Null and void, Insider dealing, Crypto asset exchange. Chapter 5
Market order: An order without a price limit that executes against the best opposing prices in the order book. If no opposite orders exist it is rejected, and any partly filled balance stays in the book at the last execution price. Market orders cannot be entered during the DFM pre-opening session. See also: Limit order, Continuous trading session. Chapter 8
Money laundering: Converting or moving criminal proceeds to hide their origin, or knowingly acquiring, holding or using the proceeds of a felony or misdemeanour (Federal Decree-Law No. 20 of 2018). It is an independent crime: the person who committed the original, predicate offence need not be punished for it first, and punishment for that offence does not bar a laundering conviction. See also: Money laundering penalties, Terrorist financing, Federal Decree-Law No. 20 of 2018. Chapter 5
Money laundering penalties: The basic offence carries up to ten years in prison, a fine between AED 100,000 and AED 5 million, or both, and attempts are punished alike. Aggravating circumstances, such as abuse of professional influence, use of a non-profit or organised crime group, or repeat offending, mean temporary imprisonment plus a fine between AED 300,000 and AED 10 million. See also: Money laundering, Legal person liability, Administrative penalties (AML). Chapter 5

N

Net asset value (NAV): The value of a fund's assets after its liabilities are deducted. Several rules use it: a private equity fund calculates NAV and the unit price every three months, an ETF's NAV per unit is reviewed daily, a cash fund may borrow up to 10% of NAV for redemptions, and a venture capital fund's total risk exposure may not exceed NAV. See also: Fund reporting, Private equity fund, Cash investment fund. Chapter 3
Null and void: Describes a deal the law treats as having no legal effect at all. In the exam rules this covers, for example, a trade in listed securities that is not recorded through the market, a listed-company insider's deal without board approval and market disclosure, and deals tied to false rumours, inside information or fictitious trading. See also: Insider dealing, Market manipulation, Federal Law No. 4 of 2000. Chapter 1

O

Ongoing due diligence: Continued scrutiny during a relationship, checking that transactions match what the firm knows of the customer, its business and its risk profile, and keeping CDD data current. Higher-risk customers deserve particular attention, customers who joined before the rules still need CDD at times set by risk, and life policy beneficiaries are monitored too. See also: Customer due diligence (CDD), Risk-based approach. Chapter 5
Outsourcing: Using an outside provider for a licensed body's tasks. The firm keeps full responsibility, may not hand over all its essential tasks, sends the Authority each signed contract immediately and avoids providers dismissed by another licensed body for breach within the last year. A provider serving several licensed bodies needs Authority approval, and work goes abroad only where expressly permitted. See also: Cloud computing. Chapter 2

P

Pledge: Using securities to secure a debt. The Depository Centre registers pledges and liens over ownership. On ADX a pledge is possible only over securities deposited with the CSD Department and takes effect on registration. The owner normally applies; a bank creditor may apply with evidence of the owner's consent, as may a creditor acting under the owner's power of attorney. See also: Depository Centre, CSD Department. Chapter 7
Politically exposed person (PEP): Someone who holds or has held a prominent public function in the UAE or abroad, plus their spouse, children, children's spouses and parents, and known close associates. A foreign PEP always needs senior management sign-off, source-of-funds checks and closer monitoring; domestic and international-organisation PEPs need the same where the relationship is rated high risk. PEP status signals risk, not guilt. See also: Enhanced due diligence, Customer due diligence (CDD). Chapter 5
Pre-closing session: The DFM phase before the close in which orders are collected for the closing auction. The auction price is the one that maximises tradable volume and minimises the surplus; if two prices still tie, the midpoint is used, rounded up to the next tick. This differs from the opening rule, which picks the higher price. See also: Closing session. Chapter 8
Pre-opening session: The DFM phase that collects orders without executing them; market orders are not allowed. In its last five minutes orders cannot be cancelled, buy prices cut, sell prices raised or quantities reduced. The opening price maximises executed volume, then minimises unexecuted volume, then stays nearest the previous close, and finally favours the higher price. See also: Price limits, Continuous trading session, Market order. Chapter 8
Price limits: Daily limits on how far a DFM share price can move from its reference price. A share listing for the first time has no limits until a session containing at least one of its trades has closed; that closing price then sets the reference. A foreign dual-listed share opens at its home market close, with limits from its first day. See also: Pre-opening session, Dubai Financial Market (DFM). Chapter 8
Price-sensitive information: Material information that could move the price of a listed security. A listed company must release it to the whole market straight away, rather than saving it for the next periodic report or telling selected shareholders first. Anyone who trades on it before it is public is dealing on inside information. See also: Insider dealing, Closed period. Chapter 1
Price-time priority: The DFM ranking rule: best price first (highest bid, lowest offer), then earliest entry, with orders carried over from the previous session ahead of new ones; size does not count. Increasing quantity re-stamps the entire order with a new time, while reducing it or changing validity keeps its place. Changing order type means cancelling and re-entering. See also: Client order priority, Limit order, Continuous trading session. Chapter 8
Private equity fund: A fund whose incorporation agreement must cover matters such as its investments, remuneration, borrowing limits, term, distributions, withdrawals, liquidation and whether investment management is outsourced. The general partner calculates NAV and the unit price at fair value every three months and carries out a more detailed valuation, based on investees' audited accounts, at least once a year. See also: Net asset value (NAV), Venture capital fund. Chapter 3
Private fund: A local fund that is not offered to the public. The Authority decides on its initial approval within five working days. Public advertising media of every kind are off limits, and units may be transferred only to existing holders, or for a nominal value of at least AED 180,000 to professional investors and market counterparties, with family-fund exceptions. See also: Public fund, Family fund. Chapter 3
Professional Code of Conduct (DFM): DFM's conduct rules for brokerage firms. They cover client due diligence, taking orders only in writing, by recorded call, fax or email, confidentiality, separate firm and client accounts, complaints, supervision and immediate reporting of suspected manipulation. The firm answers in all cases for its staff's acts and errors, and unlicensed people may not use its trading login. See also: Client confidentiality, Segregation, CISI Code of Conduct. Chapter 8
Promoter: A firm licensed to promote financial products. It notifies the SCA in advance and registers any unregistered product; the SCA may halt the promotion within ten days, and fund units need its approval within 15 days. Material must identify the issuer's shareholders owning 10% or more, and promoters of foreign funds keep a register of unit owners. See also: Introducer, Financial promotion, Category 5: Arrangement and Advice. Chapter 6
Public fund: A local fund offered to the public. The Authority decides on its initial approval within ten working days of receiving the application, compared with five for a private fund. Besides the reports every local fund produces, it also publishes a semi-annual performance report, and the manager or founders pay the costs of offering and promoting its units themselves. See also: Private fund, Local fund, Fund reporting. Chapter 3
Public offering of shares: Issuing shares under SCA Resolution No. 11 of 2016. A newly incorporated public joint-stock company needs twelve months' working capital and a listing adviser for two years after listing, and only qualified investors may subscribe unless it is a bank, finance corporation or insurer. A converting company needs two years' net operating profit of 10% of capital or more. See also: Qualified investor, Rights issue. Chapter 4

Q

Qualified investor: An investor eligible for restricted offers (Decision No. 17 of 2014). Governments and licensed firms qualify automatically; other companies need two of three: AED 75 million budget, AED 150 million net annual return, AED 7 million funds or paid-up capital. Individuals need AED 4 million net equity excluding the main home, AED 1 million income, and knowledge or licensed representation. See also: Crypto fundraising, Public offering of shares, Limited partner. Chapter 4

R

Real estate investment fund: A fund (SCA Decision No. 6/R.T of 2019) with real estate making up at least 75% of total assets and at least 90% of revenue. Borrowing is capped at 50% of total assets, and real estate services companies at 20%. A public fund distributes at least 80% of annual net profit, and properties are valued at least every six months. See also: Usufructuary right. Chapter 3
Reconciliation: Checking client money records. An internal reconciliation compares the firm's own records, such as each client's entitlement against money held, and any shortfall is paid in by close of business that day. An external one compares the firm's records with a bank's statement; unresolved shortfalls are covered from the firm's own money, and custodian errors are pursued with the custodian. See also: Client money, Segregation. Chapter 6
Record keeping: Retention periods vary by rule, so match the record to its framework. AML transaction and CDD records: at least five years from completing the transaction or ending the relationship. Licensed body records: at least ten years, retrievable within three business days. DFM client orders: ten years. ADX ownership transfer data: at least 15 years. See also: Customer due diligence (CDD), Unified Centralised Back Office System, CSD Department. Chapter 5
Related-party transaction: A deal between a listed company and a related party, for example a company in which a director holds at least 30% of capital. Outside normal business, a deal of 5% of capital or more needs general assembly approval without the related party voting, and above 5% an SCA-accredited assessor also evaluates it. Material changes need fresh approval. See also: Corporate Governance Guide. Chapter 1
Remote access: Trading on ADX from abroad by a foreign brokerage company. It needs prior ADX approval, registered with the Authority within five working days, and a home regulator in IOSCO applying comparable KYC, CDD and AML/CFT standards. Renewal is sought at least one month before expiry, and an internal auditor's compliance report is due within 90 days of year-end. See also: Abu Dhabi Securities Exchange (ADX), E-Trading. Chapter 7
Rights issue: A share issue whose subscription rights can be transferred and traded apart from the shares themselves. The company must announce it at least twenty business days before subscription opens, and the rights must be tradable for at least ten business days. The listing of the rights ends when that trading period expires. See also: Public offering of shares. Chapter 4
Risk-based approach: Matching the depth of due diligence and monitoring to the money laundering and terrorist financing risk each customer, product or channel presents. Firms document their own risk assessment and show it to supervisors on request, assess new products before launch, and have senior management approve controls sized to their risks, nature and size. Low risk never removes basic verification. See also: Enhanced due diligence, Ongoing due diligence. Chapter 5

S

SCA board: The SCA's governing board. Members other than the chief executive serve four-year terms, renewable once. It meets at least every two months or when four members ask, and a valid meeting needs a majority including the chairman or deputy. The chair breaks ties, votes by proxy or letter are barred, and the board reports to the Cabinet every six months. See also: Securities and Commodities Authority (SCA). Chapter 1
SCA Rulebook: The SCA's main rulebook for licensed firms (Chairman's Decision No. 13/RM of 2021). It lists the licensed financial activities and licence categories, sets capital and staffing requirements and accounting system controls, and covers the general duties of licensed bodies and the sanctions for breaches. Where it was later amended, the exam tests the Rulebook as issued in 2021. See also: Licence category, Article 17 sanctions, Unified Centralised Back Office System. Chapter 1
Securities and Commodities Authority (SCA): The UAE federal regulator of securities and commodities markets, created by Federal Law No. 4 of 2000 as a public authority based in Abu Dhabi, with legal personality and independent finances and administration. It licenses and supervises markets and firms and protects investors, but does not run trading or clearing or promise returns. The exam tests this framework. See also: Federal Law No. 4 of 2000, SCA board, SCA Rulebook. Chapter 1
Security token: A crypto asset shaped like a share or a bond, giving rights such as part-ownership, profit share or repayment of a fixed sum; classification follows those rights, not how the token is used. Only an entity incorporated in the UAE, financial free zones included, may offer one, with prior approval unless the offer is for qualified investors alone. See also: Crypto asset. Chapter 4
Segregation: Keeping client assets and money apart from the firm's own so they remain identifiable as client property, especially if the firm fails. Registered investments are held in the client's name or that of a nominee or trust company acting for the client. Segregation protects ownership, not investment value, and DFM brokers must also separate their own accounts from clients'. See also: Client money, Crypto asset custodian, Professional Code of Conduct (DFM). Chapter 6
Self-managed fund: A local fund founded by two or more natural or corporate persons instead of a licensed manager. The founders' combined subscription must reach AED 5 million, and they must keep their units for six months or more. A corporate founder needs at least AED 20 million of capital and main-activity net profits in its two financial years before applying. See also: Local fund. Chapter 3
Settlement: The post-trade stage in which securities pass to the buyer and cash to the seller. The depository releases the seller's securities only once payment to the seller is assured, which protects the seller. Each market sets deadlines: an ADX clearing member funds its settlement account by 09:00 on settlement day, and a DFM client has two settlement days to pay. See also: Depository Centre, Clearing, Failed settlement. Chapter 4
Share buy-back: A listed company buying back its own shares for resale (Decision No. 40 of 2015). Conditions: two financial years of listing with two approved audited balance sheets, a special resolution of the general assembly, Authority approval, a 10% cap on paid-up capital, no buy-back within six months of a public issue, and a year since the last resale. See also: Public offering of shares. Chapter 4
Shell bank: A bank with which the AML rules ban any dealing, wherever it is licensed, including opening an account in its name or accepting its funds. The same rules also ban anonymous accounts and accounts in fictitious names, pseudonyms or numbers. Unlike higher-risk relationships, these cannot be made acceptable through extra checks or internal sign-off. See also: Customer due diligence (CDD). Chapter 5
SPAC escrow account: The protected account receiving at least 90% of a SPAC's offering proceeds within two business days of receipt. The money may only fund a business combination, pay redeeming investors, return funds after a failure and meet the account's own costs. On failure, investors are repaid pro rata within ten business days and liquidators appointed within 30. See also: Special purpose acquisition company (SPAC), Business combination. Chapter 6
SPAC public subscription: A SPAC's public offer of shares and warrants. The approval request, signed by founders and board, is due within 30 business days of the commercial licence. Subscription runs 5 to 30 business days, with up to ten more if undersubscribed. Shares are allotted within five business days, excess refunded within five of allotment, and listing sought within three of registration. See also: Special purpose acquisition company (SPAC), SPAC escrow account. Chapter 6
Special order: A trade-size rule in the market trading regulations: an order above 80% of the broker's bank guarantee counts as a special order only once the market has approved it in advance. A deal at exactly 80% does not qualify, and size without prior approval is not enough. Ordinary trading has to pass through the market's electronic system. See also: Licensed market. Chapter 1
Special purpose acquisition company (SPAC): A company the Authority classifies as a SPAC on application (Chairman's Decision No. 1/TM of 2022). Before its business combination it may only offer, issue and list its shares and warrants and search for a target. Issued capital must be at least AED 100,000 at incorporation and AED 100 million after the offering, with sponsors' shares between 3% and 20%. See also: SPAC public subscription, SPAC escrow account, Business combination. Chapter 6
State of emergency: An event beyond a licensed body's control that it could not prevent despite reasonable precautions, such as a fire, a power cut or lost connections. The firm must inform the Authority immediately, setting out the likely effects and the steps taken or planned to limit losses, instead of waiting until the problem has been fixed. See also: SCA Rulebook. Chapter 2
Suitability: The test for financially complex products, whether the firm recommends or only executes: does the product suit the client's investment objectives, financial circumstances and experience? With too little information the firm must not proceed. If a warned client insists, it follows the order and keeps evidence. Clients confirm their data yearly, and reports are updated every three years. See also: Appropriateness, Execution-only business. Chapter 6
Sukuk: Islamic bonds listed under SCA Decision No. 16 of 2014, normally with total nominal value of at least AED 10 million. They need Shariah Committee approval, and adverts by non-government issuers need the Authority's prior approval. The obligor keeps a UAE paying agent, reports any change of agent, and files audited annual accounts within 180 days for a primary listing. See also: Islamic securities, Debt securities. Chapter 4
Suspicious transaction report (STR): A report sent to the FIU without delay when there are reasonable grounds to suspect funds are linked to crime. No proof or minimum amount is required, and attempted transactions count. Good-faith reporting carries no liability and breaches no secrecy duty. Failure to report can bring prison, a fine between AED 100,000 and AED 1 million, or both. See also: Financial Intelligence Unit (FIU), Tipping off, Compliance officer. Chapter 5

T

Terrorist financing: Supplying or gathering money, knowing or intending that it will support terrorism in whole or in part. The money may be lawfully earned and need not yet have been spent. Under the law the exam tests, the penalty is life imprisonment, or temporary imprisonment of ten years or more, together with a fine between AED 300,000 and AED 10 million. See also: Money laundering, Legal person liability. Chapter 5
Third-party reliance: Using another regulated and supervised party to carry out CDD steps for a firm. The firm remains responsible for the measures, must receive the CDD information straight away and must be able to get document copies promptly when it asks. A customer's consent does not, by itself, make such reliance acceptable. See also: Customer due diligence (CDD). Chapter 5
Tick (minimum price movement): The smallest step by which a contract's price can move. Divide a price change by the tick to count ticks, and multiply the tick by the contract size to value one. DGCX examples: gold US$0.10 per ounce, silver US$0.005 per ounce (US$5 per contract), WTI US$0.01 per barrel, India Gold Quanto US$1 per lot. See also: Dubai Gold & Commodities Exchange (DGCX), Gold Futures, Crude oil futures. Chapter 7
Tipping off: Warning anyone, not only the customer, that a suspicious transaction report has been filed or is planned, or revealing a related investigation. Penalties: imprisonment for six months or more, a fine between AED 100,000 and AED 500,000, or both. If further CDD would itself alert the customer, the firm holds back and reports, giving its reasons. See also: Suspicious transaction report (STR). Chapter 5
Trading member: A DFM firm that executes trades but does not clear them. It contracts with a clearing member, sends that contract to the SCA and DFM, and takes no cash from clients, who pay the clearing member. A trading and clearing member handles client cash but may not credit post-dated cheques until cashed or pay out to clients in debit. See also: Clearing member, Brokerage firm (DFM). Chapter 8

U

Unified Centralised Back Office System: The electronic accounting system a Category 1 firm runs for its own and its clients' accounts. Each entry gets a fixed automatic serial number and local time stamp, entering and posting are separate steps, and posted entries are locked. Daily incremental and monthly full backups sit on separate media for ten years, and client statements show commission separately. See also: Category 1: Dealing in Securities, Record keeping. Chapter 1
Usufructuary right: A right to use and benefit from a property for a period without owning it outright. A real estate investment fund may acquire such a right only if at least seven years of it remain. Rights with under 30 years left are allowed, but their total is limited to 25% of net assets. See also: Real estate investment fund. Chapter 3

V

Venture capital fund: A fund that must keep at least 70% of its assets in its qualifying venture investments. Other investments allowed for public funds are capped at 30% of assets, as is total lending to unlisted companies it invests in. Once managed assets reach AED 180 million, it needs a Risk Management Officer and a full IFRS annual report. See also: Private equity fund, Net asset value (NAV). Chapter 3

W

Watch list: Monitoring of a troubled listed company by a joint committee formed by the Authority, initially for one year and extendable to three years. The company must present a regularisation plan, approved by its board and by an expert entity that the Authority has approved, then update the committee on progress every three months or whenever asked. See also: First and second category, Delisting. Chapter 4
Whistleblowing: A licence applicant's policy encouraging staff to raise breaches of laws, rules and technical requirements with senior management and with the Authority. It protects reporters from unfair prejudice and keeps their identity secret during any investigation. It is separate from client complaints and gives no immunity for the reporter's own misconduct. See also: Internal audit, Compliance officer. Chapter 2

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Definitions are written by Bourse Prep for study purposes and describe the rules as the exam material states them. Where the law has changed since, see regulatory updates explained. Always confirm detail against the official CISI workbook.

UAE FRR glossary

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