Emirates Securities and Commodities Authority (SCA) has granted National Bank of Abu Dhabi (NBAD) a license to practice the 'Securities Custody' activities of securities listed on local markets in UAE.
The granting of the license is in line with the SCA’s efforts to further improve efficiency of the country’s capital market by new financial services on its markets in accordance to meet the growing demands of investors.
According to the ‘Securities Custody’ transaction, an investor may entrust his securities in the custody of a specialized company or bank licensed for that activities. The securities are then kept by the bank or company in the form of book interest in the name of the investor, who may mandate the custodian to act appropriately on the securities, for example, by referring them to a broker when the owner wants them sold.
Moreover, the investor may also mandate the custodian to receive on his behalf dividends when they are being distributed. The custodian may also represent the investor in other activities like subscription of IPO, attending general assembly meetings and voting on his behalf but according to the investor’s instructions.
HE Ibrahim Al-Za’abi, deputy CEO for licensing, supervision and enforcement Affairs at SCA, has said that it will lead to better regulating of the market and encourage investors, particularly, corporate investors, to invest more on the local markets, adding that it will also, on the other hand, lead to significant liquidity surge on the local markets and vigorously activate transactions.