Regulations as to Finanical Brokerage Business in Dubai, UAE

Basic Information on setting up Brokerage Business in UAE.

1.        The brokerage activity may only be practiced after obtaining a license from the Authority that should be renewed on annual basis, and after registration in the Brokerage Firms Register with the Authority.

2.        The Authority may issue a decision to stop unauthorized brokerage business.   Such decision may include the closure of the place where the activity is practiced.

3.        A brokerage firm may not be a partner in another brokerage firm.  It may only be a partner in any other company after obtaining the approval of the Authority and in accordance with the controls set by the Authority.

4.        A partner in the brokerage firm may neither be a partner in another brokerage firm by more than (20%) of its capital, nor be a member of its board of directors or management board, and may not hold a position in its executive management.

5.        Partners, board members, directors and employees of a brokerage firm may not make any buying or selling of commodities, options contracts or futures for their own account or for the account of their spouses, ascendants or descendants up to the second degree or for the account of such relatives or their minor children, or as agents for any other person, before the advance disclosure to the market of each transaction before its execution.

I.   Market membership shall be as follows:

1.        Trading Member.

2.        Brokerage Firm (Trading Member).

3.        Brokerage Firm (Trading & Clearing Member).

4.        Brokerage Firm (Trading & General Clearing Member).

II.   The market shall determine the conditions and requirements of membership  (Trading Member).

III.  To license a brokerage firm (Trading Member, Trading & Clearing Member and Trading & General Clearing Member), the following conditions must be met:

1.     The applicant should be a juridical person taking one of the following forms:

a.     A company established in the State in accordance with the provisions of the Commercial Companies Law.

b.     A company licensed by the Authority to operate in the field of securities in accordance with the regulations issued by the Authority to prevent conflicts between activities.

c.     A commercial or investment bank, an investment company or a finance company licensed by the UAE Central Bank, subject to obtaining a no-objection letter from the UAE Central Bank to practice the activity.

d.     A foreign company or a branch of a foreign company licensed to practice the brokerage activity in the parent country.

e.     A foreign bank or a branch of a foreign bank licensed to practice the brokerage activity in the parent country subject to obtaining a no-objection letter from the UAE Central Bank.

f.   An individual establishment or a free zone company in case the market is established in a free zone.

2.     Payment of the prescribed license fees.

3.     Provide a financial guaranty as determined by the market and in accordance with  the established procedures therein, and to comply with any additional guaranty determined by the market at a later  time.  Such guaranty shall be, in whole or in part, subject to the disposal of the market in coordination with the Authority to ensure the settlement of all transactions of the brokerage firm and to perform its obligations towards the Authority, the market or its customers arising from the brokerage business practice.

4.     The Capital must not be less than one (1) million UAE Dirhams for the brokerage firm (Trading Member) and two (2) million UAE Dirhams for the brokerage firms (Trading & Clearing Members, and Trading & General Clearing Members.)

5.     Appoint the technical and administrative staff as necessary to practice the brokerage activity in accordance with the regulations issued by the Authority concerning the requirements of this activity and the conditions and requirements for the accreditation of certain jobs.

6.     Provide an adequate headquarters, software and technical systems necessary to  conduct this activity.

7.   Any additional conditions or requirements as determined by the Authority in accordance with the requirements of public interest.

IV.   Foreign companies licensed by similar regulatory bodies in their countries to practice the brokerage activity shall be exempted from clauses (4-6), provided that they have experience in this area  for ​​not less than five (5) years.

V.   A brokerage firm must continuously meet all the license conditions.  In the event of loss of any condition specified herein, the Authority shall have the right to revoke the license.

NOTE: Please visit www.sca.gov.ae to know more about the complete rules and regulations.  
Reference and courtesy : Emirates SCA
Warning : this is not legal advice or complete guidelines for the subject matter.