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Abu Dhabi: Emirates Securities and Commodities Authority (Esca) on Saturday issued new regulations requiring financial analysts and stock market consultants to be accredited by the authority before providing their services.
The new regulations will be effective within a timeframe of four months, allowing for coordination between parties concerned; namely the authority, stock markets, the central bank and the brokerages.
According to the new rules, analysts and consultants can only provide advice if they are licensed by Esca, and work for a firm that is also licensed for the activity by the market regulator according to the specific criteria set in the new regulations.
"The new rules have been drafted after a lengthy period of public consultation, and in coordination with international expertise," Abdullah Al Torreifi, Esca's chief executive officer, said.
Ownership
Companies providing forecasts and analysis must be 51 per cent owned by a UAE or GCC national with a minimum paid-up capital of Dh1 million, while the authority retains the right to license international service providers.
"The regulations will fortify the legislative framework set for UAE stock markets, ensuring professionalism and transparency, in the light of the growing number of conflicting reports setting diverse fair value for many of the listed shares with the sole aim of influencing the price," said Hamed Kazim, Esca's board member.
Qualifying as head for a research and analysis department requires a relevant and recognised university degree and at least five years of experience, while financial analysts are required to have the same academic qualification and at least three years of working experience. Both need to pass a qualifying exam according to the criteria set by the authority.
"We need to maintain the credibility of company appraisals and financial analysis, abiding by the relevant standards, allowing investors to take the right decisions of buying, selling, or holding," said Mahmoud Al Mahmoud, Esca's board member.
Companies and staff providing such services are prohibited to trade in the concerned share one week prior to issuing a report or research note, and are required to document these papers as well as all the relevant sources of information, in case the authority needs to verify the practice.
Licences for companies and individuals are renewable and have a duration of one year that terminates by the end of December.
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