The SCA and the Financial Sector
The Securities and Commodities Authority (SCA) plays a huge role in maintaining the integrity and transparency of the UAE’s financial sector. As a hub for trade and global-scale financial dealings, the SCA helps set standards for business, oversees licensing, and monitors compliance for industries under its umbrella.
Understanding the SCA’s responsibilities and regulations can be difficult, even for a storied financial expert with experience in the field. This can make operating your business challenging and cause a lot of headaches that hinder your path to success. But it doesn’t have to be that way.
At MSZ Consultancy, we simplify the business setup process and help you navigate the complexities of starting an SCA-regulated activity in Dubai. Let’s walk you through everything you need to know, so you can make the best decision for your business’s future.
What is the SCA?
The Securities and Commodities Authority (SCA) oversees the securities and commodities market in the UAE. Its mission is to protect investors, encourage growth, and maintain transparency in all financial dealings.
Whether you’re trading securities, managing investments, or providing financial advice, the SCA guarantees that all activities comply with UAE laws and standards.
Financial Activities That Fall Under SCA Authority
The SCA supervises a wide range of financial activities throughout the UAE. This effort helps maintain market integrity and keeps the UAE market running smoothly. Here’s a simple breakdown of the key activities they cover:
- Trading Brokers - Trading brokers help clients buy and sell securities within UAE markets.
- Trading and Clearing Brokers - These entities facilitate trade and manage financial settlement processes.
- International Brokers - International brokers manage cross-border securities trading and deal with international markets.
- Securities Dealers - Securities dealers buy and sell securities directly on behalf of clients or for personal gain.
- Financial Consultants and Advisors - Financial advisors offer professional guidance on investments, risk management, and financial growth strategies.
- Listing Advisors - A listing advisor helps businesses prepare for and navigate the process of going public on the stock market.
- Securities Portfolio Management - This field manages investment portfolios for clients to achieve specific financial goals.
- General Clearing - The SCA is responsible for overseeing fixed-term and other deposit-related investments.
- Investment Management - Investment managers oversee funds or assets for individuals or institutions
- Bank Deposits - The SCA is responsible for overseeing fixed-term and other deposit-related investments.
- Credit Ratings - The SCA helps to maintain the financial stability and creditworthiness of companies or securities.
A Financial Activities License
You'll need financial activities license to operate an SCA-regulated business. This license is divided into five distinct categories:
- First Category: Dealing in Securities - This license is for businesses buying, selling, or trading securities such as stocks and bonds within UAE markets.
- Second Category: Dealing with Investments - Covers businesses involved in managing investment portfolios, advising clients, or operating investment funds to help grow wealth.
- Third Category: Keeping, Clearing, and Registration - This category is for companies in safekeeping, clearing, and maintaining accurate securities transactions.
- Fourth Category: Credit Rating Agencies - The fourth category is dedicated to businesses that evaluate the financial stability of companies and securities.
- Fifth Category: Arrangement and Advice - This category applies to financial advisors and consultants who provide guidance and facilitate financial arrangements for clients.
The Initial Approval Process for Financial Activity Licensing
- Submitting Your Business Plan - Your business plan should clearly define your services, operational strategies, and financial plans. For this, you'll want to include revenue projections, risk management strategies, and details about your target market.
- Making Sure All Activities Align with SCA Regulations - Your services must strictly match the SCA’s authorized activities. Clearly outline your operations and demonstrate how they uphold market transparency and integrity.
- Verifying the Qualifications of Your Team - Submit detailed resumes and highlight expertise in financial advisory and trading. The SCA prioritizes qualified teams.
Approval is an essential first step to operating legally and building trust with your clients.
Conditions for Initial Approval and Evaluation Criteria
Before granting initial approval, the SCA evaluates businesses based on several standards. These conditions include:
- Capital Requirements - Your business must meet the SCA’s minimum capital threshold, which varies based on the type of financial activity you plan to conduct. This proves your company has the financial stability to manage operations and mitigate potential financial risks.
- Personnel Qualifications - The SCA requires that your team include experienced and certified professionals who know the complexities of the financial industry. This helps maintain high standards and improves trust with clients and regulators.
- Infrastructure - Your company must have the necessary tools, technology, and systems to operate effectively. This includes secure IT platforms, office space, and compliance mechanisms.
How to Start an SCA-Regulated Business in Dubai
Starting your SCA-regulated business requires you to complete a few key steps, and understanding the lay of the land can help streamline this process. Here are the steps you’ll want to take for the best results:
- Meet the Minimum Requirements - Your first step will be to make sure you have the necessary capital to get started. You’ll also need to hire qualified personnel and establish an operational infrastructure.
- Gather Documents and Submit Application - You’ll need to prepare a comprehensive application with supporting documents such as business plans, resumes, copies of passports, and certifications.
- Undergo Compliance Assessment - After submitting your application, the SCA will review your business plan and make their assessment.
- Ongoing Compliance - Once approved, your business can conduct business in the UAE but must regularly meet reporting and operational standards to maintain its license.
SCA Licensing Vs. DIFC and Dubai Free Zone Licensing
The type of licensing you need depends on your business location and industry focus. Let’s explore the differences between SCA and DIFC licensing:
- SCA Licensing - SCA licensing covers financial activities throughout Mainland UAE and is ideal for businesses across the region.
- DIFC Licensing - This license is specifically for businesses that operate within the Dubai International Financial Centre, a Free Zone with its regulatory framework.
MSZ Consultancy Can Help You Start Your Business in Dubai
Navigating SCA regulations and licensing can feel overwhelming, but you don’t have to go it alone. MSZ Consultancy is here to help you meet legal requirements so you can focus on what you do best, building your business.
Ready to start your SCA-regulated business in Dubai? Contact us today at +971 52 544 1248 and let’s make your vision a reality! We’ll provide you with a FREE quote and a curated playbook on how to take your investments to new heights.
