By Daniel Stanton
One of firms named in list of suspensions says it met capital requirements, other firms still raising funds.
One of the firms named in the Emirates Securities and Commodities Authority's (ESCA) list of suspensions today says that it met the minimum capital and guarantee requirements by the end of June, the regulator's original deadline.
The regulator announced today it had suspended 11 brokerage firms for failing to increase their paid-up capital from 10 million dirhams ($2.7 million) to 30 million dirhams ($8.2 million) and their bank guarantee from 10 million dirhams to 20 million dirhams by the end of September. The deadline was originally extended from June 30.
International Shares and Bonds Centre in Al Ain told Arabian Banking & Finance that it is still fully operational, following discussions with ESCA last night.
"We spoke all night," said an employee of the company, who did not wish to be named. "They went back to their offices and they fixed everything. They sent a letter to the markets not to stop our companies."
It is believed that the firm was only named in the list of companies that did not meet capital requirements due to a clerical error or delay.
ESCA was not available for comment.
Another firm told ABF that it had already received offers to acquire or merge with the company, but expected to complete its capital increase within seven days and be fully operational again.
All of the firms ABF spoke to said that they were currently in talks with banks or shareholders to raise funding and expected to meet ESCA's requirements by the end of October. Several firms blamed delays in banking procedures for their failure to meet the deadline.
The UAE brokerage firms that are still suspended are Amwal International Financial Brokerage, Merchant Securities, Al-Madina Financial Brokers, Faisal Shares & Bonds Broker, Emco Financial Services, Delma Brokerage, Dubai Brokerage, Al-Theqa Financial Services, Global For Shares and Bonds, and Falcon Financial Services.
Companies which do not meet ESCA's minimum requirements by the end of October will not be allowed to continue their brokerage business in the UAE.
"If the market conditions are going like this, the small firms are not going to be there," said Ramesh Iyer, compliance officer, Merchant Securities.
He pointed out that it is difficult to raise capital while trading volumes on the UAE stock markets are still relatively low, and that competition had increased with the entry of firms like HSBC, which yesterday announced the launch of its brokerage firm which will operate on the UAE domestic markets.