Securities and Commodities Authority (SCA)Securities and Commodities Authority (SCA)

At a two-hours long closed doors meeting, which was attended by senior officials from the Stocks and Commodities Authority (SCASCA), Abu Dhabi Securities Exchange (ADX) and DFM, a group of 50-share brokers from Dubai and Abu Dhabi, presented a paper containing proposals on 12- critical areas, which have recently contributed to the worsening of the situation, or could have had avoided the crisis from escalating.

"The 12-suggestions if adopted by the economic regulators such as SCASCA, Central Bank of the UAECentral Bank of the UAE, Ministry of Economy and other regulators can reverse the plummeting shares prices," said a broker, after attending the meeting, held Wednesday afternoon.

SCASCA held out assurances to brokers for giving careful consideration to the suggestions made and making a strong case to the government on the basis of the paper presented.

The brokers asked for making the law on buying-back shares more flexible to boosting the market, in circumstances like present. Without referring to Emaar Properties, it asked for tough penalties for companies, who after obtaining all regulatory permissions, skip on their responsibilities by not buying back the shares on different flimsy pretax, thus throwing the market into tailspin. In this regard, they urged for setting up a financial fund, enabling those companies to draw money from, to buy-back their shares, which will help bolster the eroding share prices, and encourage in bringing back the scared investors. The brokers asked for a setting up a Dh2 billion facility for margin trading, to be managed electronically.

It also asked for another credit facility on easy terms, amounting to Dh2 billion, to help facilitate the share brokers, who are suffering from lack of financial resources, as their traditional credit facilities have dried up, since Banks have turned their backs on them.

They also asked the Central Bank of the UAECentral Bank of the UAE, to treat the share brokerage companies, at par with finance companies, which have access to its different financial instruments, specially created windows and funds, in times of crisis.There was a suggestion to reconsider the upper and lower limit of share price fluctuations, in creating an effective mechanism of safety valves to protecting the share investors' exposure.

The brokers also suggested delaying the proposed Margin Trading Law, which is due anytime, as it would have no impact on the market in current situation.

By Haseeb Haider

© Khaleej Times 2008

 

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