Chapter 1 sets out who regulates the UAE securities market, how a market is licensed and run, and what listed companies, licensed firms and their people must do. It carries about 11 of the 100 exam questions, and it introduces the regulator and the rulebooks that later chapters build on.
This chapter is the base of the UAE FRR syllabus. It starts with Federal Law No. 4 of 2000, which created the Securities and Commodities Authority (SCA) and set the framework for licensing and supervising markets. It then moves to the Cabinet resolutions on how the SCA board works and how a market is licensed, the SCA regulation on how a licensed market runs, the Governance Guide for public joint-stock companies, the CISI Code of Conduct, the SCA Rulebook licence categories and the accounting system controls for licensed firms. Much of the chapter is detail: periods, thresholds and who must do what. Learn each figure together with the body or person it belongs to.
Federal Law No. 4 of 2000 set up the Securities and Commodities Authority as a public authority based in Abu Dhabi, with its own legal personality and financial and administrative independence. It is separate from the Central Bank. The law gives it three objectives: to create conditions in which savings are invested in securities and commodities, with prices set by supply and demand and investors protected; to build investment awareness through research and published recommendations; and to support financial and economic stability. The SCA regulates and supervises markets, brokers and listed companies. It does not run trading or clearing systems or keep share registers, it is barred from owning or issuing securities and from commercial business, and investor protection is not a promise against losses. Every six months its board reports on market activity to the Cabinet of Ministers.
A market may take the form of a local public establishment or a public joint-stock company, and either way it may not trade until the SCA licenses it. Where it is a local public establishment, its board is appointed by a resolution of the competent local authority, and a member must leave on bankruptcy, if convicted of a crime involving dishonour or breach of trust, or after three consecutive meetings missed with no acceptable excuse. The market records every deal in its listed securities, and deals done away from it must be reported to it; an unrecorded deal is void. The market's regulations govern transfer of ownership, its registration and custody, and the issuer must complete its own step without delay. In exceptional circumstances the market board can halt trading, provided most of its members are present.
A listed company must release to the market straight away any material information that could move the price of its securities. Its chairman, directors, general manager and employees may deal in its shares only with the board's approval and with the deal disclosed to the market; if either step is missing, the deal is void. The law also bans using inside information to buy or sell for personal gain, spreading rumours about buying or selling, and falsifying information to sway prices or investors' decisions. Deals tied to insider dealing or to rumours are void as well. The SCA board can also call on any individual or company linked to securities activities to reveal those activities, in public or in private, and to provide information about them.
Cabinet of Ministers Resolution 2000-13 of 3 July 2000 sets out how the SCA works. The board meets at least once every two months, and also whenever four or more members ask. Notice goes out in writing with the agenda. A meeting is valid only if a majority attends and that majority includes the chairman or the deputy chairman; the person chairing has the casting vote, and nobody may vote by proxy or by letter. The deputy steps in when the chairman cannot act. Under the law itself, members other than the chief executive serve four years, renewable once. The chief executive sends the draft budget to the board no later than one month before the next fiscal year starts and presents the final accounts, with the auditor's report, within 90 days of year-end.
Cabinet of Ministers Resolution 2000-11, also of 3 July 2000, governs market licensing through a short, timed process of examination, completion, decision and notice. SCA regulation 2001-3 of 29 April 2001 then governs the licensed market. The market stays under SCA supervision and control, and the SCA may inspect and investigate it once it has fixed the scope and named the investigator. Licensed brokers and the issuers of listed securities must be members. A director general and a deputy run the market with enough staff, and its board members may not sit on the board of any public joint-stock company or broker. Trading runs at least five working days a week and two hours a day, and the market sends the SCA its audited annual accounts within one month of its 31 December year-end.
The Governance Guide, issued as SCA Chairman's Decision No. 3/RM of 2020, applies to public joint-stock companies. The board carries primary responsibility for putting the governance rules into practice, checking they are followed and amending them; delegating tasks does not shift it. The Guide's principles include Accountability, Equity and Responsibility, and Equity means treating all shareholders fairly, minorities included. Governance records and minutes stay at head office for at least ten years. Under Article 30, a board member may accept a gift or simple hospitality worth up to AED 500 only if it is not linked to a particular deal and is not meant to influence them. A company in which a director owns at least 30% of the capital counts as a related party, and deals with it face approval and assessment rules set by size.
CISI membership brings a personal duty to meet the standards in the Code of Conduct Principles. The Principles ask for more than mere compliance: where law or regulation sets a duty, meet its letter and its spirit, and act with integrity and honesty. Named principles include Personal Accountability, Client Focus, Conflict of Interest, Respect for Market Partners, Professional Development and Aware of Capabilities. Four self-check questions help when the right course is unclear: Clear & Honest, Impartial & Open, Informed & Fair, and Straightforward & Transparent. A conflict must be spotted and actively managed, not just disclosed or logged. A member who lacks the competence for a task, and cannot get suitable help, should not act on it.
The SCA Rulebook, issued as Chairman's Decision No. 13/RM of 2021, sorts licensed activity into numbered categories, and this chapter tests Categories 1 to 5 as issued in 2021. Category 1, Dealing in Securities, needs paid-up capital of AED 30 million and covers trading brokers and securities dealers. Category 2, Dealing in Investment, covers managing funds and portfolios and needed AED 50 million. Category 3, Custody, Clearing and Registration, also needed AED 50 million and covers safe custody, clearing, covered warrants, depository bank roles and registrars of private joint-stock companies. Category 4, Credit Rating Agencies, needs AED 5 million. Category 5, Arrangement and Advice, which the syllabus calls Ranking and Advice, covers promotion and financial consulting and had no capital minimum. Each category has its own main functions and approved jobs.
Annex 2 sets out the accounting obligations. The SCA Rulebook requires a Category 1 firm to run the Unified Centralised Back Office System, an electronic accounting system for its own and its clients' accounts. Each entry gets an automatic serial number that can never be changed and an automatic local date and time; the time may be altered only in exceptional cases, and the system must report any entry whose date or time was changed. Entering and posting are separate tasks, entries are posted daily and then locked, and the server runs on the country's local time. Every user has an individual password and role-based powers, with audit trails of entries, permission changes and logins. Backups run daily (incremental) and monthly (full), on separate media away from the live server, and are kept for at least ten years.
A short revision checklist written by Bourse Prep from the syllabus and from our verified question bank. Use it to check yourself after studying the chapter. It does not replace the official workbook. Unfamiliar term? See the UAE FRR glossary.
The figures in this chapter that the exam material states, each with the rule it belongs to. Learn the figure and its owner together. Test yourself on them in Rules Lab.
| What | Figure | Context |
|---|---|---|
| SCA board member term | Four years | renewable once; the chief executive is excluded |
| SCA final accounts | 90 days | after fiscal year-end, with the auditor's report |
| Declaring a change in holdings | One week | from becoming aware, for SCA and market board members and market officials |
| Examining a market licence application | 15 days | from submission, with up to 15 more days from notice to complete it |
| Board decision on a complete market licence application | 30 days | the parties are then notified within one week |
| Minimum market trading schedule | Five working days a week, two hours a day | excluding official holidays |
| Special order threshold | Over 80% of the broker's bank guarantee | only with the market's prior approval |
| Market's audited annual accounts to the SCA | One month | after a 31 December year-end |
| Governance records and back-office backups | At least 10 years | two separate retention rules with the same period |
| Gift limit for board members | AED 500 | only if not linked to a deal or meant to influence |
| Related-party ownership test | 30% | a director's share of the other company's capital |
| General assembly approval threshold | 5% of capital | the related party may not vote |
| Category 1 minimum paid-up capital | AED 30 million | Dealing in Securities |
| Categories 2 and 3 minimum paid-up capital | AED 50 million | Rulebook as issued in 2021 |
| Category 4 minimum paid-up capital | AED 5 million | Credit Rating Agencies |
Places where the syllabus draws a line between two rules that sound alike. They are not predictions about any exam.
Several rules in this chapter end the same way: the deal has no legal effect. A private transfer of listed securities that is never recorded is void. An insider's deal with board approval but no disclosure to the market is still void, because both conditions apply. Do not reach for a fine, a grace period or a court application where the law itself makes the deal void.
The licensing process uses several short periods that are easy to swap. The SCA has 15 days from submission to check whether an application is complete. An applicant told that material is missing has up to 15 days from that notice to supply it. The board then decides within 30 days of a complete application, and the parties must be told within one week of the decision.
These are three different duties. An issuer must complete its part of a valid transfer without delay, with no fixed number of days. A listed company must disclose price-sensitive information to the market immediately. Board members and market officials have one week from becoming aware of a change in their holdings to declare it in writing. Match the deadline to the person before you match it to a number.
An SCA board meeting needs a majority of members, and that majority must include the chairman or the deputy chairman; a majority without either is not enough. A market board deciding to suspend trading in exceptional circumstances needs a majority of its members present. Neither rule demands unanimity, and the chief executive cannot stand in for the chairman.
Category 4 has four main functions: 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 posts, so a second analyst does not fill the gap. Category 4 has no risk management officer among its main functions, although Categories 2 and 3 require one.
A board member may accept a gift or simple hospitality worth AED 500 or less, but value is only the first test. The gift must also have no link to a particular deal of the company and must not be aimed at influencing the member. A gift timed around a decision that involves the giver can fail the second test even when it is well under the limit.
The exam tests the rules in the study material for syllabus version 4.2. Where the law has changed since, Bourse Prep keeps the exam answer and notes the change separately. The regulator is the authority on current law. All regulatory updates explained.
The exam tests Federal Law No. 4 of 2000 and refers to the Securities and Commodities Authority. From 1 January 2026, Federal Decree-Laws No. 32 and No. 33 of 2025 replaced that law and the SCA became the Capital Market Authority, but the exam is still based on the earlier law.
The exam uses a single minimum of AED 50 million for Category 2, Dealing in Investment, from the Rulebook as issued in 2021. From 29 July 2022, under Decision No. 18 of 2022, capital has been set per activity, with AED 1 million for fund management as one example, but the exam still tests the 2021 figure.
The exam rule is that Category 5, Arrangement and Advice, had no minimum paid-up capital. From 15 April 2023, under Decision No. 23 of 2023, it has required at least AED 500,000, but the exam still tests the Rulebook as issued in 2021.
Study tools for the rules in this chapter: side-by-side comparisons, decision paths and procedures. More are collected in Rules Lab.
| 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.
The learning objectives for this element, as the CISI UAE Financial Rules and Regulations syllabus, Version 4.2, effective 10 September 2023 lists them. Every question in our bank is mapped to one of them.
Chapter 1 has 94 questions in the Bourse Prep bank across 16 learning objectives, so filter practice to this chapter and work one objective at a time rather than in one long set. This chapter turns on exact periods, thresholds and named bodies. When you miss an item, note which rule you mixed it up with, for example a one-week declaration against immediate disclosure, and keep a short list of those pairs. Return to the licence categories and back-office controls until each figure arrives with its category.
15 questions from all eight chapters. The answer is only revealed once you have committed to one.
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