Licensed Financial Activities Under the UAE Securities & Commodities Authority (SCA)

The UAE Securities & Commodities Authority (SCA) regulates capital market activities to ensure market integrity, investor protection, and systemic stability.
Any entity wishing to operate within the UAE capital markets must be licensed for specific financial activities, each with a clearly defined scope, obligations, and compliance framework.

Below is a practical overview of the main licensed activities under SCA, explained in business terms rather than legal jargon.

1. Brokerage – Trading Broker

This activity allows firms to receive, transmit, and execute client buy or sell orders for securities listed on UAE markets.

Key characteristics:

• Acts purely as an intermediary

• Executes trades on behalf of clients

• Does not handle clearing or settlement

• No proprietary risk exposure

Typically suitable for:

• Agency brokerage models

• Execution-only firms

• Firms focused on order routing and market access

2. Brokerage – Trading & Clearing Broker

This license expands the brokerage role to include clearing and settlement of executed trades.

Key characteristics:

• Executes trades and settles transactions

• Maintains direct relationships with clearing entities

• Manages post-trade obligations

• Higher operational and risk-management requirements

Typically suitable for:

• Full-service brokerage firms

• Institutions handling higher transaction volumes

• Firms with in-house back-office infrastructure

3. Trading in International Markets

This activity permits firms to mediate trades in foreign securities markets, including derivatives and commodity contracts listed outside the UAE.

Key characteristics:

• Execution of trades on foreign exchanges

• Orders are routed to licensed overseas markets

• Must coordinate with counterpart regulators

• Strict disclosure and client-protection rules

Typically suitable for:

• Global brokerage firms

• Cross-border trading platforms

• Firms offering international market access

4. Financial Products Dealer

A Financial Products Dealer trades for its own account, assuming full market risk.

Key characteristics:

• Proprietary trading activity

• No client order execution

• Risk is borne entirely by the firm

• Subject to capital adequacy and exposure controls

Typically suitable for:

• Market-making entities

• Proprietary trading firms

• Structured products providers

5. Brokerage in Commodities

This activity allows firms to mediate trades in commodities, futures, and options approved by the Authority.

Key characteristics:

• Covers physical and financial commodities

• Includes agricultural products, metals, indices, and currencies (non-securities)

• Contracts are standardized and exchange-approved

• Does not include securities trading

Typically suitable for:

• Commodity brokers

• Derivatives intermediaries

• Institutional trading facilitators

6. Financial Consultation

This is one of the most widely misunderstood activities.
It includes financial advice, analysis, and planning, but not execution.

Permitted services include:

• Investment recommendations

• Financial research and valuation analysis

• Portfolio and financial planning

• Public or private investment opinions

Restrictions:

• No order execution

• No custody or client money handling

• Advice must be suitable, documented, and non-misleading

Typically suitable for:

• Advisory firms

• Family offices

• Research and strategy boutiques

7. Custody (Safe Custody)

Custody firms safeguard client securities and related rights.

Key characteristics:

• Holding securities on behalf of investors

• Managing corporate actions (dividends, voting)

• Asset segregation and protection

• Strong internal control systems required

Typically suitable for:

• Banks and custodians

• Institutional service providers

• Clearing-linked infrastructure firms

8. Securities & Commodities Market Operation

This activity applies to entities that organize and operate markets, including listing, supervision, and enforcement.

Key characteristics:

• Market infrastructure role

• Oversight of trading activities

• Licensing and supervision of brokers

• Typically public or quasi-public entities

9. Management Services for Investment Funds

These entities provide administrative and operational support to investment funds.

Services include:

• Investor record keeping

• Reporting and disclosures

• Regulatory communication

• Data protection and governance support

Important note:
This activity does not include discretionary investment decision-making.

10. Consulting in the Issuance of Securities

This activity relates to capital raising and securities offerings.

Key characteristics:

• Advising issuers during IPOs or private placements

• Coordinating with regulators and advisors

• Structuring offerings and disclosures

• May include underwriting support (if agreed)

Typically suitable for:

• Corporate finance advisors

• Capital markets consultants

• Issuance structuring firms

11. Consulting in Listing of Securities

Focused specifically on pre-listing and post-listing advisory.

Key characteristics:

• Advising issuers on listing requirements

• Ensuring ongoing compliance

• Supporting governance and disclosure obligations

12. Promotion

Promotion is a regulated activity covering any communication intended to encourage investment.

Key characteristics:

• Marketing of financial products

• Investor outreach and campaigns

• Strict content and disclosure rules

• Separation from advice and execution

Typically suitable for:

• Marketing firms in finance

• Placement agents

• Distribution support entities

13. Portfolio Management

Portfolio management allows firms to manage client investments, either:

• Discretionary (manager decides), or

• Non-discretionary (client decides)

Key characteristics:

• Investment decision-making authority

• Fiduciary duty to clients

• Strong risk and compliance oversight required

14. Trading in Non-Regulated Derivatives & Forex Spot Market

This is the activity most commonly associated with Forex Spot and OTC derivatives.

Key characteristics:

• Mediation of FX spot trades

• OTC derivatives execution

• Clearing and settlement included

• Strict conduct and disclosure obligations

This activity is typically structured carefully and often paired with dual-license or offshore execution models, depending on the business strategy.

Why Activity Selection Matters

Under SCA rules, each activity is licensed separately, even if conducted under the same entity.
Choosing the wrong activity—or combining activities incorrectly—can result in regulatory delays or rejection.

At Alliance Advisers, we focus on:

• Correct activity mapping

• Regulatory-friendly structuring

• Scalable, future-proof licensing strategies

Need help structuring your SCA-licensed business?

We assist clients from concept to licensing, including hybrid and dual-license strategies aligned with UAE regulations.

🌐 www.allianceadvisers.com
📞 +971 50 297 5530