Understanding the Securities and Commodities Authority License (SCA)

The world of financial markets is full of complexity and dynamics. Here, to maintain transparency and stability and build confidence in the investors, a robust regulatory body is vital. There are various jurisdictions based on the geographical location of a financial institution. In the Middle East there is one such authority, which is the Securities and Commodities Authority (SCA), established in 2000 in the United Arab Emirates (UAE). SCA is the basic regulatory service that overlooks the securities and commodities markets within the UAE.

If you are a broker looking for operations within the UAE’s financial markets, you would require a license that is provided by the SCA, and this blog would be very informative for you. Let us try to understand what is the SCA license and what is its importance.

What does the SCA License mean?

A legal authorization that is generated by SCA to financial institutions operating in securities and commodities markets within the UAE is nothing but the SCA license. The financial institutions may be brokerage firms, financial advisors, fund managers, investment companies, or any other financial intermediaries.

It is compulsory to have an SCA license to comply with the regulatory requirements decided by the SCA. Once you have the license, you are bound to meet the criteria, including financial stability, operational integrity and adherence to legal and ethical standards.

Importance of the SCA License:

1. Compliance with the regulations:

The SCA license adheres to the institution's compliance with the regulatory requirements set by the SCA. It is mandatory to have the license to maintain integrity, transparency, and investor security in the financial market.

2. Building trust in the investors:

An investor looks for institutes that provide security and confidence along with its services. This is possible only with licensed entities, as there will be reduced risk of fraud or malpractice.

3. Credibility in the Market:

The financial industry is very risky, and it demands a clean reputation and credibility from an institution. Holding an SCA license would mean high credibility and a genuine image of the financial body. A valid license commits not only regulatory compliance but also professionalism and ethical conduct.

Access to the whole market:

The absence of a license restricts the financial institution from conducting certain activities within the UAE’s securities and commodities market. To offer all their services to investors, the entity has to hold a valid license.

Process of obtaining the SCA License:

One can obtain an SCA license by following several steps that include:

1. Submit your application:

A comprehensive application including details about the entity’s business model, organizational structure, shareholders, financial statements and compliance measures is a must for any institution to obtain a license.

2. Validation of the detail:

The SCA authorities would conduct a detailed review of the entire application, including background information checks of the company as well as key individuals to make sure the criteria are met properly.

3. Assessment of compliance:

It is important to measure the capacity of the entity in terms of regulatory requirements, capital adequacy, risk management, internal controls, and anti-money laundering measures.

4. Approval:

If the SCA succeeds in determining the entity’s capacity to fit within the set criteria, it approves the SCA license, and the entity can commence operations within the UAE’s security and commodity markets.

Holding a valid regulatory license is the first requirement for any brokerage. Check out www.pheasantech.com for available options based on various jurisdictions and make your choice. WhatsApp us to discuss this further.