So here's an interesting story from the Gulf News on Wednesday. Harsh words indeed from the ESCA (Emirates Securities and Commodities Association - the market regulator for DFM and ADSM, commonly referred to as SCA).
Abu Dhabi: A top government official has issued a serious warning to day traders against speculative trading in the UAE stock markets. "Many are practising leveraging, and it seems that everyone is contributing to this problem, and I suggest that brokerage houses assign internal supervisors to ensure that its brokers do not get involved in day-trading activities," Ebrahim Zaabi, Director of Brokers supervision at Esca, told the brokers yesterday.
Not before time I would say, actually it's probably about 12 months overdue at least. There is a difference between day-trading and leveraging which may not be clear from the passage I quoted. It is fair to say that many day-traders do use leveraging. Now there were some punishments listed but will they get that far is an important question.
Further on in the article ...
National Bank of Abu Dhabi (NBAD) hosted a meeting for representatives of the 74 registered brokers in the UAE, as well as representatives of Esca, DFM, and ADSM, to discuss the recent market crashes and the degree brokerage firms are abiding by the codes of ethics of the profession.
It all sounds very friendly and chummy doesn't it?
The recommendations included as well the suggestion of establishing a brokers' association, and issuing a booklet outlining rules and codes of the profession, in addition to limiting the licensing of new brokerage firms or upgrading the requirements.
Good-oh. Well, if the brokerage firms are a problem then good that it's being dealt with. I get a sense from reading the article that there may be some brokers who have set themselves up not necessarily to provide a service, but trade directly on the market themselves.
Surely it's the investors who have to take responsibility for their investment decisions? It may sound harsh but sooner or later the market will sort itself out along with investors/brokers on shaky ground, irrespective of however many meetings and serious warnings there are. As usual though, we'll never learn anyway and all pile in once the markets get all excited again...
