Trading sets out the rules around an order on the Abu Dhabi Securities Exchange (ADX), from the broker's electronic service through clearing and settlement to the ownership register, then turns to commodities clearing and the contracts of the Dubai Gold and Commodities Exchange (DGCX). It carries 11 of the 100 exam questions, and almost every rule in it depends on an exact figure, time or order of steps.
This chapter is about the machinery around a trade rather than the choice of investment. It opens with the controls on electronic and remote access to ADX, then sets out what ADX expects of its brokers: periodic reporting, sell orders, client payment defaults, debt instrument pricing and big-block deals. The central section covers the Clearing, Settlement and Depository Department (CSD), which issues investor numbers, takes in paper certificates, settles trades, draws on collateral when a member fails to pay and records pledges. The chapter then turns to central counterparties that clear commodities contracts and closes with DGCX contract specifications. Several figures differ only slightly, such as 45 and 90 days, so learn each one together with its rule.
E-Trading is the electronic facility through which a broker's client enters buy and sell orders on ADX. It remains a brokerage service: only a brokerage company approved by ADX may offer it, and the application must include reports on the technical system and the devices that link the company to the exchange. The system must identify users, with mutual client and server authentication and a second factor, resist internal and external attacks, close idle sessions and keep another channel for identifying clients if it fails. The broker sends monthly client statements, appoints a compliance officer and keeps back-up copies of E-Trading data for ten years. Clients accept that an online order may not be processed at once.
A foreign brokerage company may trade on ADX from outside the UAE only after ADX has approved it, and it must register that approval with the Securities and Commodities Authority (the Authority) within five working days. Membership of the Dubai Financial Market (DFM) gives no access to ADX. The firm must be licensed by a home regulator that belongs to IOSCO and whose KYC, CDD and AML/CFT procedures are at least comparable, UAE brokers must receive reciprocal treatment, and the firm undertakes to disclose company and customer information on request. Renewal is applied for at ADX at least one month before expiry, with the fees, and the renewed approval is again registered within five working days. Quarterly reports are due within 45 days, and the annual compliance report, prepared by the internal auditor, within 90 days of the fiscal year-end.
ADX brokers file audited quarterly reports within 45 days of each quarter end and audited annual statements within 90 days after their financial year closes. They also pass ADX any approval, from the Authority or another competent authority, for listed changes such as a capital increase or decrease, a new head office or branch address, or a licensed activity change. Before entering a sell order, the broker checks that the client owns the securities, unless the Authority's short-selling regulations apply, and pays sale proceeds, less commissions and fees, within the period agreed with the client. If a client fails to pay for a purchase the broker took full responsibility for, the broker may sell, with ADX approval, within one business day after settlement. ADX takes any profit for the Investor Protection Fund, and the broker bears any loss.
A debt instrument trades on ADX one instrument at a time, each unit reflecting the nominal value set in its issue, and one deal can cover several units. Prices are quoted clean, so the buyer also pays the interest accrued up to settlement. Big-block deals have their own conditions. The securities must normally amount to 1% or more of the issuer's capital, though ADX management may waive this to protect trading and the parties. Without a waiver, one party must stand alone on one side, with at most ten on the other. The price must lie within 25% of the previous close, above or below. The deal does not affect the closing price, the index or the session and 52-week highs and lows, and commission is charged on whichever is higher, the execution price or the previous close.
The CSD, part of ADX, does the market's post-trade work. It clears and settles trades for clearing members, netting what each member owes and is owed, records changes of ownership electronically, keeps the central register and holds investor accounts. Ownership transfer data and the papers behind it are kept for at least 15 years, in confidence except where the rules allow. An issuer approved for listing gives the CSD its shareholder register, updated within five working days, and stays responsible for its accuracy and completeness. No investor may open a trading account or trade without an investor number from the CSD. Normally one number serves an investor across all brokers; an individual institution owned by an investor and each sub-fund of a parent fund are the exceptions. The exam material treats all of this as one ADX department.
Paper holdings must enter the CSD before they can be traded. The owner, or a legally authorised representative, asks for the deposit and supplies the documents; a broker is not that representative merely because it runs the owner's trading account. The issuer or its registrar checks validity, ownership and the requester's identity and capacity, then dematerialises the certificate and notifies the CSD, which books the holding to the investor's CSD deposit account. Allotment letters follow the same route, with the original letter or a certificate lodged under the investor number; a lost or damaged letter is replaced first. A broker asked to move an investor's securities into that account must complete the move before trading starts on the next working day. Bonus shares are credited in whole numbers, and the issuer sells the pooled fractions within 30 days of registration.
Each clearing member lodges a settlement guarantee as cash, a bank guarantee or both, and may lift its trading ceiling by pledging qualifying securities. On settlement day the CSD sends its settlement report to the settlement bank by 08:00, the member must have the amount it owes in its settlement account by 09:00, and the settlement bank must pass the money to the ADX settlement account by 09:30. If the member has not funded, the bank uses the member's overdraft facility, which the member repays with interest and fees by 09:00 the day after settlement day. The CSD then draws on collateral in a fixed order: cash guarantee, bank guarantee, pledged securities. Only securities deposited with the CSD can be pledged, normally at the owner's request, and a pledge takes effect once registered on the automated clearing system.
Authority Resolution No. (11) of 2015 governs central counterparties (CCPs) that clear commodities contracts. An applicant must hold at least AED 50 million in paid-up capital and reserves and pays a licence fee of AED 200,000 in advance. At least one third of the board must be independent, with a minimum of two. Dismissing the internal auditor needs a board decision, with reasons sent at least 30 days ahead to the Authority and to the auditor. Margin and default fund contributions are cash or securities, never bank guarantees. Margin must cover a 99% confidence level, close-out within one day and the biggest risks of the past three years, with back-testing. The fully funded default fund must withstand the failure of the two largest clearing members and is stress-tested at least daily. Continuity and recovery plans are tested, with results published.
The DGCX section is a set of contract specifications: size, minimum price movement, last trading day, final price and settlement day. Gold, India Gold Quanto, Shanghai Gold and Silver run on a two-month delivery cycle beginning in February; each gold contract offers six delivery months and Silver five. WTI and Brent each list 18 monthly delivery months, and WTI adds ten semi-annual months in June and December; Mini WTI lists 12 and Dubai India Quanto crude two. MSCI India Index Futures are 25 times the index and move in steps of 0.5 index points. They stop trading on the last Thursday of the delivery month, or the business day before it when that Thursday is a non-business day. An index closing error that reaches the exchange more than 30 minutes after the final price is published is not corrected.
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 |
|---|---|---|
| Registering a foreign broker's ADX approval with the Authority | five working days | also applies after each renewal |
| Applying to renew remote access | at least one month before expiry | the application goes to ADX with the renewal fees |
| ADX broker audited reports | 45 days quarterly, 90 days annual | from the quarter end or the financial year-end |
| Big-block minimum size | 1% of the issuer's capital | ADX management may waive it |
| Persons on the multi-party side of a big-block deal | no more than 10 | the other side is a single person |
| Big-block price band | within 25% of the previous close | above or below |
| Broker's sale after a client payment default | within one business day after the settlement date | needs ADX approval |
| Issuer's shareholder register for listing | five working days | from listing approval, at the latest |
| CSD ownership transfer records | at least 15 years | kept with the related documents |
| Sale of pooled bonus share fractions | 30 days | from registration in the issuer's account |
| Clearing member funding on settlement day | 09:00 | report to the bank by 08:00; bank transfer by 09:30 |
| Commodities CCP paid-up capital and reserves | AED 50 million | minimum for the clearing licence |
| Commodities clearing licence fee | AED 200,000 | paid in advance |
| CCP skin in the game | AED 10 million | minimum own contribution in the default waterfall |
| CCP margin confidence level | 99% | with close-out within one day and back-testing |
Places where the syllabus draws a line between two rules that sound alike. They are not predictions about any exam.
Both send profit to ADX, but losses fall differently. Where a client fails to pay for a purchase the broker had taken full responsibility for, the broker sells with ADX approval, ADX takes any profit for the Investor Protection Fund and the broker bears any loss. Where ADX directs the broker to buy back or resell so that an unlawful trade is undone, the profit again goes to ADX, but the broker may recover a loss from the client who caused the breach.
An ADX clearing member can meet its settlement guarantee with cash, a bank guarantee or a combination, and pledged securities are used separately to raise its trading ceiling. A commodities central counterparty works the other way: margin and default fund contributions must be cash or securities, and a bank guarantee is not accepted. Check which regime the facts describe before deciding whether a bank guarantee counts.
Four times sit close together and each belongs to a different step. The CSD sends its settlement report to the settlement bank by 08:00. The clearing member must have the money in its settlement account by 09:00. The bank passes the money to the ADX settlement account by 09:30. If the bank had to use the member's overdraft, the member must repay it, plus interest and fees, by 09:00 the day after settlement day.
Gold Futures settle at the last trading day's daily settlement price, not the last trade and not a benchmark. Silver and India Gold Quanto Futures settle at the benchmark reference futures price made public that day, with the Clearing Corporation setting a price when it is missing. Dubai India Quanto Crude Oil Futures take the WTI final price and convert it using the Reserve Bank of India's official reference rate for the US dollar.
Last trading days hang on different anchors. Gold, India Gold Quanto and Silver: take the delivery month's final business day and step back two business days. Shanghai Gold: the 15th of the delivery month, counting calendar days. WTI, Mini WTI and Dubai India Quanto: find the 25th of the month before delivery, then step back four business days. Brent: in the month two months before delivery, take the second-last business day.
A commodities CCP meets three different amounts. AED 50 million is the minimum paid-up capital and reserves for the clearing licence. AED 200,000 is the licence fee, paid in advance. AED 10 million is the minimum skin in the game, the CCP's own contribution in the default waterfall, used after the defaulting member's resources and before other members' contributions. Match each amount to its purpose, not to its size.
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 material places clearing, settlement and depository work in a single ADX department, the CSD, and that is the structure the exam tests. ADX transferred these services in February 2025 to two group companies, AD Clear (central counterparty) and AD CSD (central securities depository).
Study tools for the rules in this chapter: side-by-side comparisons, decision paths and procedures. More are collected in Rules Lab.
| 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.
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.
The Bourse Prep bank has 79 questions on this chapter. Filter Practice to Chapter 7 and start at Foundation level, because the figures cluster: broker deadlines, big-block tests, settlement times, CCP amounts and DGCX specifications. When you miss one, read why each wrong answer is wrong, since a wrong option is often another rule's figure. Use the Rules Lab tools on this page for the settlement sequence and the contract table, and work the big-block price band and tick counts by hand until they are quick.
15 questions from all eight chapters. The answer is only revealed once you have committed to one.
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