University of Modern Sciences

College of Business
------------------------------------------------------------------------------
-------------------------------------

FINA 350
Spring 2014/2015

INVESTMENT ANALYSIS
Dr. Abdussalam Ismail Onagun
PROJECT

Prepared by: Salem Al Hashimi

20132824
Section 3
Introduction

Definition of Securities
A legal contract representing the right to receive future benefits under a stated set of
conditions

Forms of Securities
Money market securities

Short-term debt instruments sold by governments, financial institutions and

corporations
They have maturities when issued of one year or less
The minimum size of transactions is typically large, usually exceeding $100,000

Capital market securities

Instruments having maturities greater than one year and those having no
designated maturity at all

Securities in the United Arab Emirates

Securities and Commodities Authority (SCA)

Since its inception, the Securities and Commodities Authority has been keen on putting
the objectives stated in the Federal Law No. (4) of 2000 into effect by sparing no effort
to strengthen the legislative structure through issuing such regulations and instructions
that ensure the development of the organizational and supervisory framework of the list
joint-stock companies and other companies operating in the securities field. Besides,
the Authority has introduced some controls and criteria that would contribute positively
to enhancing the investors' trust in the Authority.

As part of the Authority's continuous effort to streamline its control and supervisory role
and improve the organizational aspects of the companies subject to control, the
Authority has deemed it suitable to alert these companies to the basic requirements
stipulated by the Trading Companies Law No. 8/1984 and the amendments thereof and
the Federal Law No. 4/2000 and the regulations, decisions and circulars issued in
implementation thereof.

Based on the above, markets for trading in securities and commodities have been set
up in the UAE where each market shall take the shape of a local public establishment
licensed by the Securities and Commodities Authority, provided that the markets across
the UAE are electronically connected on a reciprocal basis.

The market is managed by a board, which is formed by a decision by the competent

local authority, provided that none of the board members shall be a board member of a
listed public joint-stock company or a financial broker.

Goals of Securities and Commodities Authority (SCA)

To contribute to the development of a stable environment that attracts investment
to the capital market.
To protect the rights of investors and other concerned parties of the capital
market.
To entrench the principles of good practices by all parties involved in the market.
To ensure the provision of all administrative services according to the best
criteria of quality, efficiency and transparency.

Rule and Regulations

Federal law no. (4) of 2000 concerning the emirates securities & commodities
authority and market
Decision no (13) of 2000 concerning the regulations as to the functioning of the
securities & commodities authority
Decision no (3\r) of 2001 concerning the regulations as to the functioning of the
market
The council of ministers decision no. (11) of 2000 concerning the regulations as
to market licensing and supervision
The authoritys board of directors decision no. (2/r) of 2000 concerning the
regulations on market membership
Decision no (70\r) of 2003 concerning the opening of trading floors
The significant of Securities in the United Arab Emirates
A securities market is created to help finance growing, or sometimes new,
corporations. A securities market finances di-rectly when its principals or
mem-bers invest or lend their own funds. Because this source of funds is
obviously limited, cus-tomers must inevitably be re-cruited to participate in
financing operations.
A securities market meshes with the first. A securities market, while providing
industry with new capital, must simultaneously help investors and lenders to
locate se-curities which meet their objec-tives.
A securities market is as crucially important as the first two, though rarely as
appreciated. A securities market provides liquidity, to vary-ing degrees, for the
securities traded within its domain. Full liquidity would mean ready salability or
Purchas ability of any reasonable quantity of a particular security at or near its
latest current market price.
The securities market allows people to do more with their savings than they
would otherwise. It also allows people to do more with their ideas and talents
than would otherwise be possible. The peoples savings are matched with the
best ideas and talents in the economy. Stated formally, the securities market
provides a linkage between the savings and the preferred investment across the
entities, time and space. It mobilizes savings and channelizes them through
securities into preferred enterprises.
The securities market enables all individuals, irrespective of their means, to
share the increased wealth provided by competitive enterprises. The securities
market allows individuals who cannot carry an activity in its entirety within their
resources to invest whatever is individually possible and preferred in that activity
carried on by an enterprise. Conversely, individuals who cannot begin an
enterprise they like can attract enough investment form others to make a start
and continue to progress and prosper.
 The securities market also provides a market place for purchase and sale of
securities and thereby ensures transferability of securities, which is the basis for
the joint stock enterprise system. The liquidity available to investors does not
inconvenience the enterprises that originally issued the securities to raise funds.
The existence of the securities market makes it possible to satisfy simultaneously
the needs of the enterprises for capital and of investors for liquidity.
The liquidity the market confers and the yield promised or anticipated on security
encourages people to make additional savings out of current income. In the
absence of the securities market, the additional savings would have been
consumed otherwise. Thus the provision of securities market results in net
savings.
The securities market enables a person to allocate his savings among a number
of investments. This helps him to diversify risks among many enterprises, which
increases the likelihood of long term overall gains.
The securities market fosters economic growth to the extent that it augments the
quantities of real savings and capital formation from any given level of national
income, increases net capital inflow from abroad, raises the productivity of
investment by improving allocation of investible funds, and reduces the cost of
capital.
The securities market facilitates the internationalization of an economy by linking
it with the rest of the world. This linkage assists through the inflow of capital in
the form of portfolio investment. Moreover, a strong domestic stock market
performance forms the basis for well performing domestic corporate to raise
capital in the international market. This implies that the domestic economy is
opened up to international competitive pressures, which help to raise efficiency.
The securities market enlarges the financial sector, promoting additional and
more sophisticated financing; it increases opportunities for specialization, division
of labor and reductions in costs in financial activities.
The securities market helps the user in many ways to reduce the cost of capital.
They provide a convenient market place to which investors and issuers of
securities go and thereby avoid the need to search a suitable counterpart.
 The securities market provides standardized products and thereby cuts the
information costs associated with individual instruments. The market institutions
specialize and operate on large scale which cuts costs through the use of tested
procedures and routines.
The securities market provides a fast-rate breeding ground for the skills and
judgment needed for entrepreneurship, risk bearing, portfolio selection and
management.
The securities market serves as an engine of general financial development and
may, in particular, accelerate the integration of informal financial systems with the
institutional financial sector. Securities directly displace traditional assets such as
gold and stocks of produce or, indirectly, may provide portfolio assets for unit
trusts, pension funds
References
Federal law no. (4) of 2000 concerning the emirates securities & commodities
authority and market
http://www.sca.gov.ae/ENGLISH/Pages/default.aspx
http://www.adx.ae/
http://en.wikipedia.org/wiki/Abu_Dhabi_Securities_Exchange
http://www.iflr.com/Article/2680248/Securities-regulation-in-the-UAE.html
http://www.marketswiki.com/mwiki/Emirates_Securities_and_Commodities_Auth
ority