Securities and Commodities Authority issues second license for national bank

The Securities and Commodities Authority has issued to the Union National Bank a license to pursue clearing activities.

The second license provided in three months for a national bank, the move is aimed to diversify services provided across the country's financial markets as part of the consistent efforts made to promote their global rating.

The first license was issued in June to Emirates NBD to pursue the clearing activity and act as a "General Clearing Member" in the local financial markets. Emirates NBD was the first entity to receive this approval in the financial markets in the United Arab Emirates after meeting the conditions and requirements set by the SCA.

The approval enables the clearing member to perform clearing and settlement for the brokerage firms (clearing member) and their clients, after concluding a bilateral agreement to settle the accounts of the brokerage firm's clients or the accounts of the firm. This agreement would regulate the business relation between both parties and the rights and liabilities of each party, as well as how to distribute the commission on them.

The Authority's Board Of Directors' Decision No. (2/R) Of 2001 Concerning The Regulations As To Trading, Clearing, Settlement, Transfer Of Ownership And Custody Of Securities stipulates that the clearing member should be a local bank or a branch of a foreign bank licensed to operate in the UAE and approved by the SCA to perform the clearing business. Except for the local banks or the branches of foreign banks licensed to pursue the custody of the securities, the clearing activity may not be practiced unless after obtaining the SCA's approval which shall be renewable annually upon meeting the necessary requirements and payment of the prescribed fee.