CMA Decision No. 47/R of 2012 · UAE Federal
Board regulation on lending and borrowing of securities, amended in 2014 and 2015 and now listed by the CMA among superseded regulations.
Board Decision No. 47 of 2012 regulated securities lending and borrowing on the UAE securities markets and the agents who arrange it. Issued in Abu Dhabi on 12 August 2012 under Federal Law No. 4 of 2000, it took effect the day after publication in the Official Gazette (Article 18). Decision No. 18 of 2014 amended Article 2 and deleted Article 6, and Decision No. 4 of 2015 amended Article 13 on fees. The Capital Market Authority (the former Securities and Commodities Authority) now lists it among superseded regulations; it is a historical reference.
Article 1 defined securities lending and borrowing as a contract temporarily transferring ownership of securities from lender to borrower, who must return them on demand or at the end of the agreed period. As amended, Article 2 required Authority approval, renewable annually, to act as lending and borrowing agent, except for the clearing house, brokers settling client trades under delivery-versus-payment and agreements between foreign institutions executed as the market specified. Article 3 opened the role to licensed custodians, Central Bank-licensed banks and investment companies and securities firms, subject to proof of resources, capital, systems and audit controls; Article 4 gave the Authority 30 days to decide and made approvals expire each December.
Article 8 listed the minimum terms of the lending agreement. Article 9 fixed collateral at no less than 105% of the borrowed securities' value in cash or an on-demand bank guarantee, or 110% in securities, revalued daily, topped up within two business days and liquidated the next day if not. Article 10 set agents' duties, including client authorisation, daily confirmations, risk disclosure and ten-year record retention. Articles 16 and 17 provided warnings, fines, suspension and revocation.
Lending and borrowing agents approved by the Securities and Commodities Authority, the clearing house, brokers settling client trades, custodians, and lenders and borrowers of securities on UAE markets while the regulation was in force; it no longer governs new arrangements.
English official text in 18 articles. Open the full text or jump to a provision:
| Article 2 | As amended in 2014, no person may act as agent for securities lending and borrowing without Authority approval renewed annually, except the clearing house, brokers settling clients' DVP transactions and agreements between foreign institutions executed as the market specifies. |
| Article 3 | Licensed custodians, Central Bank-licensed banks and investment companies and securities firms may be approved as agents on proof of staff, risk management, adequate capital, market-linked systems, record keeping and an auditor's certificate on the accounting system. |
| Article 4 | The Authority decides a complete application within 30 days; approval runs to the end of December and is renewed by application before the end of November with the renewal fee. |
| Article 7 | The market designates lendable securities; mortgaged securities, securities under a lien and securities bought on margin may not be lent. |
| Article 8 | The lending agreement must name the parties and agents, the security, value, period and recall right, collateral, fees, a collateral shortfall limit not exceeding 5%, default and liquidation procedures and treatment of dividends. |
| Article 9 | Collateral of at least 105% in cash or an on-demand bank guarantee, or 110% in the borrower's securities; revalued daily at closing price, topped up within two business days of a call and liquidated the following day if not. |
| Article 10 | Agents must hold client authorisation, record transactions and collateral, confirm executed transactions the same day, report to clients, disclose risks, keep records for at least 10 years and answer Authority or market requests within two working days. |
| Article 17 | The Authority may suspend or revoke approval for unmet conditions, serious breaches, unpaid fees or fines, bankruptcy or liquidation; revocation published in two daily newspapers; appeal to the competent court within 30 days. |
Article 16 allowed the Authority to investigate breaches, departures from professional conduct and abuse of borrowing to circumvent the law, and to warn the agent and order correction or impose a fine up to the maximum in the Law and its regulations. Article 17 allowed suspension or revocation of approval, with an appeal to the competent court within 30 days.
Securities lending is arranged by licensed custodians, banks and brokers; Polaris does not act as a lending or borrowing agent and is not licensed to. We meet this regulation when a client holding company or family vehicle lent listed UAE shares under a master agreement drafted to Articles 8 and 9, or when due diligence on an older structure turns up such an agreement. We note that the CMA lists the regulation as superseded, refer the client to its licensed custodian or adviser for the rules that now apply, and keep the holding entity's share records, board approvals and UBO filings consistent with the arrangement.
| Cites | Former SCA Law |
“Cites” and “Cited by” are built automatically from references in the full texts held in this library; they cover only instruments in the library.
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