FRR is a rules exam. Rules Lab helps you understand, compare and remember the rules: comparisons of rules that sound alike, decision paths, procedures in order, and the figures worth knowing.
ICWIM has Formula Lab for its calculations. UAE FRR is about rules, so its tool is Rules Lab. Everything here is written by Bourse Prep from the syllabus and our verified question bank, in our own words. It does not reproduce the workbook or our paid questions, and it is not legal advice.
| Category 1: Dealing in Securities | Category 5: Arrangement and Advice | |
|---|---|---|
| Core activity | Executing securities transactions for clients | Promotion, financial consulting and financial analysis |
| Minimum paid-up capital (as issued in 2021) | AED 30 million | None set |
| Activity and approved job | Trading broker with broker representative; securities dealer with trading manager | Promotion with promotion manager; financial consulting with financial analyst |
| Executes trades or holds client assets | Executes client trades | Neither |
| Unified Centralised Back Office System | Must run it for its own and its clients' accounts | The requirement is set for Category 1, not here |
A public joint-stock company plans a deal with another company in which one of its directors holds shares.
If the terms change significantly after approval, the deal needs fresh approval, and above 5% a fresh accredited assessment, before it is concluded.
| Compliance | Internal audit | |
|---|---|---|
| Main job | Continuous monitoring of whether the firm keeps to the law and regulations | Independent review of whether the firm's own rules, procedures and bylaws are suitable and effective |
| Access | Every record, plus the board and senior management, without restriction | The relevant records, plus the board, senior officer or board committee where needed |
| Independence | Independent resources set out in the compliance guide | Works independently and free of interference |
| Combining roles | Must stay separate from the internal audit job | Holds no other job, whatever the firm's size or the board's view |
| Escalation | Violations reported immediately under the compliance guide | Findings can go to the board, not only to the unit being audited |
A licensed body wants to hand a task to an outside provider.
In every case the contract is in writing, a copy goes to the Authority immediately after signing, and the licensed body stays fully responsible for the work.
| Cash investment fund | Real estate investment fund | |
|---|---|---|
| Core asset test | 90% or more of assets in highly liquid cash instruments | 75% or more of total assets in real estate |
| Second test | Portfolio weighted average maturity of 120 days or less | 90% or more of total revenue from real estate |
| Borrowing | Only to meet redemptions, capped at 10% of NAV | Capped at 50% of total asset value |
| Concentration limit | Debt of one issuer capped at 10% of net assets | Real estate services company and subsidiaries capped at 20% of total assets |
| Valuation | Fair value where there is no market price | At least every six months, from the appraiser's reports |
| Quality or term floor | Debt rated BBB+ or equivalent at minimum | Usufructuary rights with seven or more years left |
An investor offers shares, rather than cash, in return for fund units.
The units allocated must not be worth more than the accepted value at the time of allocation.
| First category | Second category | |
|---|---|---|
| Starting point | Every listed company is placed here at the outset | Reached only when a first-category condition fails |
| Accumulated losses | Below 50% of capital | 50% of capital or more |
| Trading suspension | No suspension lasting six months or more | Suspended for six months or more |
| Trading | Normal trading | Trading continues on a dedicated screen showing relevant information |
| Moving between them | Losses are tested once a year on the audited annual accounts; a long suspension is a separate trigger | The market makes each transfer and announces it on its website |
A listed company wants to buy back its own shares with a view to reselling them later.
Each condition must be met in its own right; passing the numerical limits does not make up for a missing approval.
A member of staff notices a transaction, or an attempted one, that does not fit what the firm knows about the customer.
A report made in good faith carries no administrative, civil or criminal liability and does not breach banking or contractual confidentiality.
A customer with no business relationship with the firm asks for a one-off transaction.
These amount tests are only for occasional transactions; CDD for a business relationship is due from the outset, at any value.
| Foreign PEP | Domestic or international-organisation PEP | |
|---|---|---|
| Identifying the PEP | Firm must take steps to establish if a customer, or a customer's beneficial owner, is a PEP | The same duty to identify applies |
| Senior management approval | Always, before starting the relationship or continuing an existing one | Where the relationship is high risk |
| Source of funds | Reasonable measures to establish it, always | Where the relationship is high risk |
| Ongoing monitoring | Always enhanced | Enhanced where the relationship is high risk |
| Who approves | The firm's own senior management; neither the FIU nor a supervisor pre-clears customers | The same, whenever the extra measures apply |
| Status of the relationship | Permitted with these controls; PEP status is a risk factor, not a prohibition | Permitted; the extra measures depend on the risk |
| Suitability | Appropriateness | |
|---|---|---|
| When it applies | A financially complex product, recommended by the firm or simply executed on the client's instruction | A product that is not complex, dealt execution-only with no personal recommendation |
| What the firm assesses | Experience, financial circumstances and investment objectives | Knowledge and experience: products and services known, past dealing by nature, volume and frequency, education and profession; then whether the product and markets fit |
| Client's income, expenses, obligations and assets | Assessed, to gauge how much loss the client could absorb | Not part of the test |
| What the report must show | Evidence, recommendation and reasons, the mechanisms and tools used and why they fit, and periodic review | Which products or services are covered, what the assessment found, and why implementation is or is not appropriate |
| Too little information | Refrain from recommending or implementing, and tell the client the information was insufficient | Refrain from implementing, and tell the client the information was insufficient |
| Negative result, client insists | Carry out the order; keep the notice of unsuitability and evidence of the insistence | Carry out the order; keep the notice and evidence of the insistence |
A firm reconciles client money or client assets and finds a difference.
No fixed reconciliation interval applies; the test is what is needed to keep the records accurate.
| Gold and silver contracts | Crude oil contracts | |
|---|---|---|
| Contract size | Gold: 32 troy ounces. India Gold Quanto: one lot. Shanghai Gold: 1,000 grams. Silver: 1,000 troy ounces, within a 10% tolerance. | WTI and Brent: 1,000 barrels. Mini WTI: 100 barrels. Dubai India Quanto: three barrels. |
| Minimum price movement | Gold: US$0.10 per troy ounce. India Gold Quanto: US$1 per lot. Shanghai Gold: CNH 0.01. Silver: US$0.005 per troy ounce, or US$5 a contract. | WTI, Brent and Mini WTI: US$0.01 per barrel, which is US$10 a contract on WTI and US$1 on Mini WTI. Dubai India Quanto: US$1. |
| Last trading day | Gold, India Gold Quanto and Silver: the delivery month's last business day, less two business days. Shanghai Gold: the 15th of the delivery month, in calendar days. | WTI, Mini WTI and Dubai India Quanto: the 25th of the month before delivery, less four business days. Brent: in the month two months before delivery, the second-last business day. |
| Delivery months available | Gold, India Gold Quanto and Shanghai Gold: six, every two months from February. Silver: five, on the same cycle. | WTI: 18 monthly, with ten extra semi-annual months in June and December. Brent: 18 monthly. Mini WTI: 12 monthly. Dubai India Quanto: two. |
| Final cash settlement price | Gold: the last trading day's daily settlement price. India Gold Quanto and Silver: the benchmark reference futures price published that day, or a price set by the Clearing Corporation if none is available. | Mini WTI: the relevant reference futures price for the last trading day, or a Clearing Corporation price if it is unavailable. Dubai India Quanto: WTI's final cash settlement price, converted using the official US dollar reference rate of the Reserve Bank of India. |
| Cash settlement | Next business day after the last trading day: Gold, India Gold Quanto, Shanghai Gold and Silver. | Next business day after the last trading day: Brent, Mini WTI and Dubai India Quanto. |
A broker proposes a single large trade in a share listed on ADX.
A qualifying deal does not feed into the closing price, the price index, or the highs and lows for the session and the past 52 weeks.
| How long it stays valid | What happens to any part not executed | |
|---|---|---|
| Day order (also what an order with no time limit becomes) | Until the session it was entered in ends | Expires and is removed from the system automatically |
| At-the-close order | Until the end of the trading session | Expires and is removed; a fresh order is needed to keep trying |
| Good-till-date (GTD) | Until the end of a date the broker specifies | Expires at the end of that date and is removed |
| Good-till-cancelled (GTC) | No set end: until it executes or the investor cancels it | Stays in force and is carried forward to later sessions |
| Immediate-or-cancel (IOC) | Must execute immediately | Any remaining quantity is cancelled |
| Fill-or-kill (FOK) | Must fill completely the moment it is entered | If the whole quantity cannot trade, the order is cancelled in full and nothing executes |
| Fill-and-kill (FAK) | Executes immediately, in full or in part, at the specified price or better | Whatever does not execute immediately is cancelled |
A broker wants to change an order that is already resting in the DFM order book.
Price always comes first; entry time matters only between orders at an equal price, and size plays no part.
The figures the exam material states, chapter by chapter. Press Cover the figures, then recall each one before you tap to reveal it. Learn the figure with the rule it belongs to: a figure without its owner is the easiest mark to lose.
| Ch. | What | Figure | Context |
|---|---|---|---|
| 1 | SCA board member term | Four years | renewable once; the chief executive is excluded |
| 1 | SCA final accounts | 90 days | after fiscal year-end, with the auditor's report |
| 1 | Declaring a change in holdings | One week | from becoming aware, for SCA and market board members and market officials |
| 1 | Examining a market licence application | 15 days | from submission, with up to 15 more days from notice to complete it |
| 1 | Board decision on a complete market licence application | 30 days | the parties are then notified within one week |
| 1 | Minimum market trading schedule | Five working days a week, two hours a day | excluding official holidays |
| 1 | Special order threshold | Over 80% of the broker's bank guarantee | only with the market's prior approval |
| 1 | Market's audited annual accounts to the SCA | One month | after a 31 December year-end |
| 1 | Governance records and back-office backups | At least 10 years | two separate retention rules with the same period |
| 1 | Gift limit for board members | AED 500 | only if not linked to a deal or meant to influence |
| 1 | Related-party ownership test | 30% | a director's share of the other company's capital |
| 1 | General assembly approval threshold | 5% of capital | the related party may not vote |
| 1 | Category 1 minimum paid-up capital | AED 30 million | Dealing in Securities |
| 1 | Categories 2 and 3 minimum paid-up capital | AED 50 million | Rulebook as issued in 2021 |
| 1 | Category 4 minimum paid-up capital | AED 5 million | Credit Rating Agencies |
| 2 | Maximum fine on a licensed body under Article 17 | AED 100,000 | a ceiling for this provision, not for every offence |
| 2 | Maximum suspension of a licensed body's financial activity | One year | imposed by the Authority under Article 17 |
| 2 | Maximum suspension of an approved employee | Two months | applies to the individual, not the firm |
| 2 | Time to start at least one licensed activity | Six months from obtaining the licence | otherwise a ground on which the Authority may cancel |
| 2 | Publication of a cancellation decision | Two UAE daily newspapers, at least one in Arabic | at the licensed body's expense |
| 2 | Licensed financial activities and licence categories | 21 activities in five categories | the activities decide the category |
| 2 | Look-back for crimes and serious violations | Five years | before the application, inside or outside the UAE |
| 2 | Look-back for moderate violations | Two years | part of the same compliance condition |
| 2 | Retention of employee records | Ten years from the last update | kept under the employee rules guide |
| 2 | Complainant's reply to a proposed referral | Ten business days | refusal or silence means no referral |
| 2 | Look-back on a provider's terminated contracts | One year | no breach-related termination by another licensed body in that time |
| 2 | Cloud data protection and back-ups | Ten years | with zero data loss over the period |
| 2 | Cloud data security report | Every year | from an external auditor, copied to the Authority |
| 2 | Retention of a licensed body's records and back-ups | At least ten years | covers electronic and paper records |
| 2 | Retrieval of any record from the archive | Three business days | a separate test from retention |
| 3 | Founders' combined subscription, self-managed fund | AED 5 million | minimum, counted across all founders together |
| 3 | Capital of a corporate founder | AED 20 million | minimum, with two financial years of net profits from its main activity |
| 3 | Founder units locked in | 6 months | at least, from the date of foundation |
| 3 | Initial approval decision | 10 working days (public), 5 working days (private) | from receipt of the application |
| 3 | Final approval evidence | 30 days | after subscriptions close, or subscribers are repaid |
| 3 | Start of the investment policy | 12 months | at most, counted from licensing |
| 3 | Local fund financial reports | 45 days and 3 months | after the half-year end and the year end |
| 3 | Private fund unit transfer | AED 180,000 | minimum nominal value for a new professional investor or market counterparty |
| 3 | Venture capital core allocation | 70% of assets | with separate 30% caps on other investments and on lending to investees |
| 3 | Venture capital Risk Management Officer | AED 180 million | of managed assets or more |
| 3 | Cash fund liquidity | 90% of assets | minimum in highly liquid cash instruments |
| 3 | Cash fund weighted average maturity | 120 days | maximum for the whole portfolio |
| 3 | Real estate allocation | 75% of total assets | minimum in real estate, with 90% of revenue from real estate |
| 3 | Real estate fund borrowing | 50% of total asset value | maximum |
| 3 | Public real estate fund distribution | 80% of annual net profit | minimum paid to unitholders each year |
| 4 | Depository Centre reporting deadlines | 45 days; three months | reviewed quarterly report after quarter-end; audited annual report after fiscal year-end |
| 4 | Internal auditor removal at the Depository Centre | at least 30 days | advance notice, with reasons, to the Authority and to the internal auditor |
| 4 | New public joint-stock company | twelve months; two years | working capital period; listing adviser period, counted from listing |
| 4 | Converting company profit test | at least 10% of capital | net operating profit over the two financial years before conversion approval |
| 4 | Rights issue | 20 and 10 business days | minimum advance announcement before subscription; minimum rights trading period |
| 4 | Share buy-back for resale | 10% | maximum of issued and paid-up capital; none in the six months after the last public issuance |
| 4 | First category tests | 50% of capital; six months | accumulated losses at or above, or a suspension of six months or more, mean the second category |
| 4 | Watch list monitoring | one year, up to three years | by the joint committee the Authority sets up |
| 4 | Notice of a delisting decision | within 30 days | from the Authority's decision to delist |
| 4 | Conciliation decision | 15 working days | from receipt of a complete application |
| 4 | Corporate qualified investor tests | AED 75 million; AED 150 million; AED 7 million | total budget, net annual return, funds or paid-up capital; any two of the three |
| 4 | Individual qualified investor | AED 4 million; AED 1 million | net equity excluding the main home; annual income, plus knowledge or licensed representation |
| 4 | Minimum listing size for debt securities and Sukuk | AED 10 million | or an acceptable equivalent, unless the Authority decides otherwise |
| 4 | Voluntary cancellation of a debt listing | at least 90 days | written notice to holders, the Authority and the market |
| 4 | Crypto fundraising cap per client | AED 350,000 | where the offer is not restricted to qualified investors |
| 5 | CDD trigger for an occasional transaction | AED 55,000 | at or above, single or apparently linked transactions |
| 5 | CDD trigger for an occasional wire transfer | AED 3,500 | at or above; suspicion or doubtful identity data trigger CDD at any amount |
| 5 | Beneficial ownership controlling interest | 25% | held alone or jointly by a natural person |
| 5 | Minimum record retention | 5 years | counted from when the transaction completes or the relationship ends |
| 5 | Compliance officer's reports to senior management | Every six months | copies go to the supervisory authority |
| 5 | Administrative fine | AED 50,000 to AED 5,000,000 | per violation, imposed by the supervisory authority |
| 5 | Basic money laundering: prison | Up to 10 years | an attempt carries the same penalty |
| 5 | Basic money laundering: fine | AED 100,000 to AED 5,000,000 | with or instead of imprisonment |
| 5 | Aggravated money laundering: fine | AED 300,000 to AED 10,000,000 | together with temporary imprisonment |
| 5 | Terrorist financing | Life, or at least 10 years, plus AED 300,000 to AED 10,000,000 | imprisonment and fine together |
| 5 | Legal person fine | AED 500,000 to AED 50,000,000 | where its representatives, managers or agents intentionally offend in its name or for its account |
| 5 | Failure to report a suspicion: fine | AED 100,000 to AED 1 million | imprisonment and/or fine; gross negligence in procedures is also covered |
| 5 | Tipping off | At least 6 months and/or AED 100,000 to AED 500,000 | imprisonment, fine or both |
| 5 | Misleading rumours or dealing on undisclosed information | 3 months to 3 years and/or AED 100,000 to AED 1 million | under the SCA disclosure rules; the deals are void |
| 5 | SCA bar on trading | Up to 1 year | counted from when the SCA decides |
| 6 | Suitability information cycle | undertaking every year; full report update every 3 years | the yearly undertaking does not replace the full update |
| 6 | Internal client money discrepancy | close of business on the reconciliation day | pay in a shortfall or take out an excess the same day |
| 6 | Retail deal confirmation | next business day after execution | at the latest; a third-party confirmation is passed on by the business day after receipt |
| 6 | Retail periodic statements | at least every 6 months | every 3 months if the client asks; monthly where leverage is authorised |
| 6 | Losses past an agreed limit | end of the same business day | next business day's end if the breach falls on a non-business day |
| 6 | SCA timing on promotions | 10 days to stop a promotion; 15 days to decide on fund units | the 10 days run from the promoter's notice |
| 6 | Issuer shareholders named in promotional material | 10% or more | a holding of exactly 10% is included |
| 6 | SPAC minimum issued capital | AED 100,000 at incorporation; AED 100 million after the public offering | two figures for two different moments |
| 6 | Sponsors' total shares | at least 3%, at most 20% | measured against issued capital plus shares due through subscription warrants |
| 6 | SPAC subscription approval request | within 30 business days of the commercial licence | the SCA then has 10 business days to decide |
| 6 | Escrow deposit | at least 90% within 2 business days of receipt | unless the SCA requires a higher percentage |
| 6 | Business combination approval | 75% or more of shares represented | votes at the general assembly, with SCA approval as well |
| 6 | Target value test | at least 80% of deposited funds | after prospectus underwriter fees and taxes on interest |
| 6 | Business combination deadline | the earlier of the prospectus period and 2 years from listing | an approved extension cannot go beyond 3 years from listing |
| 6 | After a failed business combination | refund within 10 business days; liquidators within 30 business days | both counted from the failure date |
| 7 | Registering a foreign broker's ADX approval with the Authority | five working days | also applies after each renewal |
| 7 | Applying to renew remote access | at least one month before expiry | the application goes to ADX with the renewal fees |
| 7 | ADX broker audited reports | 45 days quarterly, 90 days annual | from the quarter end or the financial year-end |
| 7 | Big-block minimum size | 1% of the issuer's capital | ADX management may waive it |
| 7 | Persons on the multi-party side of a big-block deal | no more than 10 | the other side is a single person |
| 7 | Big-block price band | within 25% of the previous close | above or below |
| 7 | Broker's sale after a client payment default | within one business day after the settlement date | needs ADX approval |
| 7 | Issuer's shareholder register for listing | five working days | from listing approval, at the latest |
| 7 | CSD ownership transfer records | at least 15 years | kept with the related documents |
| 7 | Sale of pooled bonus share fractions | 30 days | from registration in the issuer's account |
| 7 | Clearing member funding on settlement day | 09:00 | report to the bank by 08:00; bank transfer by 09:30 |
| 7 | Commodities CCP paid-up capital and reserves | AED 50 million | minimum for the clearing licence |
| 7 | Commodities clearing licence fee | AED 200,000 | paid in advance |
| 7 | CCP skin in the game | AED 10 million | minimum own contribution in the default waterfall |
| 7 | CCP margin confidence level | 99% | with close-out within one day and back-testing |
| 8 | Retention of client orders and their back-up copies | ten years | a DFM rule, separate from the general AML record-keeping minimum |
| 8 | Client statement of securities, cash and transactions | every three months | unless the client agreement sets a shorter period |
| 8 | Settlement period for a client purchase | two days | the client must pay within it |
| 8 | Sale after a client fails to pay | one working day after the settlement date | at the latest, at market price and with DFM approval |
| 8 | Closed period before financial statements | 15 days | for board members, the general manager and insider employees |
| 8 | Closed period before material information | ten days | the same insiders, before an announcement |
| 8 | Request to correct a wrong trading account number | 30 minutes after the session ends | a later request only in exceptional cases, accepted by the DFM CEO with Authority approval |
| 8 | Pre-opening restriction on weakening orders | the final five minutes | no cancellations, lower bids, higher offers or smaller quantities |
| 8 | Minimum advance deposit to open a trading account | none | the broker may not require one |
| 8 | Cash needed to buy and sell in the same session | the full purchase value | held as credit in the cash account when buying |
| 8 | Price limits on a newly listed share with no other market | none until its first session with a trade closes | that session's close sets the reference for the next session |
Some rules have changed since the exam material. For the exam, learn the exam rule. A selection:
See the full list and the themes.
15 questions from all eight chapters. The answer is only revealed once you have committed to one.
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