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The UAE Capital and Financial Markets Securities The holder of common stock can exercise control over its operation through the board of directors (group.

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Presentation on theme: "The UAE Capital and Financial Markets Securities The holder of common stock can exercise control over its operation through the board of directors (group."— Presentation transcript:

1 The UAE Capital and Financial Markets Securities The holder of common stock can exercise control over its operation through the board of directors (group of individuals that represents the owners of the corporation and oversees major decisions for the company), as each share represent one vote. This peace of paper, serving as evidence of property rights, is called a security. In addition, the amount of for which a stock can be sold or bought varies considerably, making the annual return unpredictable.

2 The UAE Capital and Financial Markets What causes a stock price to go up or down? Price reflects all the information that is available about a company and the ability of making profit in the future. As information about a company's performance flow to the public, prices might change. Supply and demand considerations can cause fluctuations in the prices. Large price changes are driven by fluctuations in liquidity. Uncertainty created by price movements can bring added volatility to the market.

3 The UAE Capital and Financial Markets Securities and Commodities Authority The Securities & Commodities Authority (SCA) has been founded based on the Federal Law no. (4) of 2000, that has stipulated on establishing the Emirates Securities & Commodities Authority & Market. Vision Leadership in developing the capital market and contributing to national economy growth

4 The UAE Capital and Financial Markets Securities and Commodities Authority Mission To protect investors and enhance the principles of sound and fair practices, and to improve the efficiency of UAE capital markets through the development of the necessary legislations, the enhancement of supervisory regulations and the development of investment and legal awareness.

5 The UAE Capital and Financial Markets Securities and Commodities Authority Values Fairness and equity: Protecting the rights of all par ties involved in the capital and commodities market and achieving safe and accurate transactions. Partnership and cooperation: Building strong alliance and strategic partnership with the aim of achieving mutual benefit and interest on the capital markets. Transparency: Providing sufficient information and data to all parties involved in the capital market at the same time. Creativity: Adopting and implementing standards of excellence and innovation in the designing and execution of tasks.

6 The UAE Capital and Financial Markets Securities and Commodities Authority Strategic Goals: - First: Developing a supervisory system of work at the SCA in accordance with the best international practices. - Second: Developing legislations that regulate business activities in the UAE capital markets. - Third: Excellence and creativity in providing services to all parties in the capital markets. - Fourth: Developing and providing the central/non- central administrative services with utmost transparency and efficiency.

7 The UAE Capital and Financial Markets Financial Market under the authority of Securities and Commodities Authority (SCA) 1.Abu Dhabi Securities Exchange ADX 2.Dubai Financial Market DFM 3.Dubai Gold & Commodities Exchange

8 The UAE Capital and Financial Markets Securities and Commodities Authority ( Legal Body) Abu Dhabi Securities Exchange ADX (Financial Market) Dubai Financial Market DFM (Financial Market ) Dubai Gold & Commodities Exchange (Derivative market) Emirates Securities Market ESM (live-market-watch screens ) NASDAQ Dubai (International Market)

9 The UAE Capital and Financial Markets Abu Dhabi Securities Exchange (ADX) (formerly Abu Dhabi Securities Market) [ADSM] (Arabic: is a stock exchange in Abu Dhabi, United Arab Emirates (UAE). Founded on 15 November 2000 to trade shares of UAE companies. There are trading locations in Abu Dhabi, Al Ain, Fujeirah, Sharjah, and Ras Al Khaimah

10 The UAE Capital and Financial Markets Abu Dhabi Securities Exchange including 67 companies in 4 sectors 1.Banking sector 2.Insurance sector 3.Services sector 4.Industry and Hotels sector Website

11 The UAE Capital and Financial Markets

12 Dubai Financial Market Is a stock exchange located in Dubai, United Arab Emirates. It was founded on March 26, There are about 61 companies listed (as of May 2012) on DFM, most of them are UAE-based companies and a few dual listings for companies based in other MENA region countries. Foreign companies are from the following countries: Kuwait, Bahrain, Oman, and Sudan. Many companies allow foreigners to own their shares.

13 The UAE Capital and Financial Markets Dubai Financial Market sectors 1.Banks 2.Investment & Financial Services 3.Insurance 4.Real Estate and Construction 5.Transportation 6.Building Materials 7.Consumer Staples 8.Telecommunications 9.Utilities

14 The UAE Capital and Financial Markets Dubai Financial Market DFM was a fully owned by Dubai government till November 2006 when it turned into a public joint stock company through an IPO, which led to sell 20% of its shares to public and 80% were subscribed by Borse Dubai, which is owned by Dubai government. As a matter of fact, DFM’s IPO has been oversubscribed by 118 times.

15 The UAE Capital and Financial Markets Dubai Financial Market Performance During 2004 and 2005, there were significant increases in the volume of shares traded and the share prices of many companies. However, towards the end of 2005 and through the first few months of 2006 the bubble burst and share values dropped by around 60% on DFM, along with similar decreases in most other Persian Gulf stock markets.

16 The UAE Capital and Financial Markets Dubai Financial Market Performance Like the revenue, DFM net profit dropped sharply from the period ended 2007 till In 2007, DFM profits reached 1,439.6 million including none operational profits coming from IPO of AED 468 million. In 2008 profits are only 605 AED million. The next year, in 2009, the profit dropped even further and reached in 2010, another drop took place and profits reached AED 79 million. Unfortunately, in 2011, DFM recorded a loss of AED 6.45 million

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21 NASDAQ Dubai (formerly called the Dubai International Financial Exchange, or DIFX), is a stock exchange opened on September, 2005, in Dubai, United Arab Emirates. Through the exchange, regional issuers can access regional and international investment. International issuers can access investment from the region, through a primary or dual Admission to Trading

22 The UAE Capital and Financial Markets NASDAQ Dubai The NASDAQ Dubai region includes the United Arab Emirates and the rest of the Gulf Cooperation Council (GCC), the wider Middle East and North Africa, Turkey and the Indian sub-continent. The majority shareholder of NASDAQ Dubai is DFM, which acquired two thirds of the shares in May 2010 from Borse Dubai and NASDAQ OMX Group. Borse Dubai still owns one third of the shares. NASDAQ OMX is a shareholder of DFM.

23 The UAE Capital and Financial Markets NASDAQ Dubai Products Products listed on NASDAQ Dubai include ordinary shares listed by DP World along with DEPA. DP World is the largest IPO in the Middle East and raised $ 4.96 billion.It was 15x oversubscribed and is one of the most valued companies in the Middle East Region. Sukuk and conventional bonds are also listed on the exchange and equity derivatives can be traded.

24 The UAE Capital and Financial Markets Dubai Gold & Commodities Exchange The Dubai Gold and Commodities Exchange (DGCX) is a financial and commodity derivatives exchange located in Dubai, the United Arab Emirates DGCX commenced trading in November 2005 as the first derivatives exchange in the Middle East and North Africa (MENA) region The Exchange is owned by the Dubai Multi Commodities Centre (DMCC), Financial Technologies (India) Limited and the Multi Commodity Exchange of India Limited (MCX).

25 The UAE Capital and Financial Markets Dubai Gold & Commodities Exchange DGCX has 267 members. It is regulated by the Securities and Commodities Authority (SCA) of the United Arab Emirates, a member of the International Organisation of Securities Commissions (IOSCO). The Exchange owns a clearing house called Dubai Commodities Clearing Corporation (DCCC).

26 The UAE Capital and Financial Markets Dubai Gold & Commodities Exchange Products DGCX trades in a wide range of derivatives contracts: -The DGCX Gold Futures -DGCX launched the world’s first Rupee Futures contract -world’s first steel rebar futures contract (2007); the MENA region’s first Copper Futures contract (2012), and the region’s first WTI and Brent Oil futures contracts

27 The UAE Capital and Financial Markets Financial intermediaries -Financial intermediaries also known as financial institutions have evolved to bring lenders and borrowers together, issue their own securities to raise funds to purchase the securities of other companies, so they provide indirect method for corporations to acquire funds. Financial intermediaries include banks, investment companies, insurance companies, loan associations, credit unions, mutual funds, and pension funds

28 The UAE Capital and Financial Markets Market Structure 1.Quota-driven markets like in the United States 2.Order-driven markets like in Australia and the UAE Trading Stocks through Order-driven market is more risky than Quota-driven markets, why?

29 The UAE Capital and Financial Markets Market Structure Quota-driven markets only displays the bid and asks offers of designated market makers, dealers or specialist. These market makers will post the bid and ask price that they are willing to accept at that time. The specialist role is to prevent panic in specific stock he or she represents in the market, to bring another advantage in quote-driven markets that the prices are intrinsically more stable than in an order-driven markets.

30 The UAE Capital and Financial Markets Market Structure Order-driven markets displays all of the bids and asks. All orders of both buyers and sellers are displayed with a detail price listing at which they are willing to buy or sell a security and the amount of the security that they are willing to buy or sell at that price. The drawback is that in an order driven- market, there is no guarantee of order execution, as first come first service. Intermediaries (brokers) have no role in the execution process.

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