Performance Highlights

January

  • NAEEM Shares & Bonds becomes Member of equity futures market

February

  • Dubai Land Department and Nasdaq Dubai sign MoU to facilitate real estate-related listings
  • Investment Corporation of Dubai lists USD 1 billion Sukuk
  • Dubai Islamic Bank lists USD 1 billion Sukuk
  • Al Ramz Capital becomes market maker for equities and equity futures
  • Africa Finance Corporation carries out USD 150 million Sukuk transaction on Murabaha platform
  • Jafza companies attend Nasdaq Dubai seminar on capital raising through an IPO

March

  • ENBD REIT lists its shares following its USD 105 million IPO
  • Dubai Islamic Bank rings bell to celebrate listing USD 1 billion Sukuk
  • Government of Hong Kong lists USD 1 billion Sukuk
  • Nasdaq Dubai and Bourse de Tunis sign MoU for collaboration on listings and Islamic finance
  • SICO UAE becomes Member to trade equities
  • Kuwait’s Warba Bank rings bell to celebrate listing USD 250 million Sukuk
  • Daman Securities becomes Member to trade equities
  • Indonesian government Sukuk raise Dubai listings to new global record above USD 50 billion

April

  • Nasdaq Dubai welcomes EU recognition of its central counterparty framework
  • Nasdaq Dubai announces it will launch ‘MarketSite’, the premier hub for capital market activities in the region, as part of 2018 move to new premises in DIFC
  • Nasdaq Dubai launches futures on National Bank of Abu Dhabi, DFM, and Dubai Investments
  • Islamic Development Bank lists USD 1.25 billion Sukuk
  • Dar Al-Arkan of Saudi Arabia rings bell to celebrate listing USD 500 million Sukuk

May

  • DAMAC Properties rings bell to celebrate listing USD 500 million Sukuk
  • Nasdaq Dubai launches futures on DAMAC Properties
  • Tunisia sets up task force with Nasdaq Dubai to pave way for issuing first Sukuk
  • Industrial and Commercial Bank of China lists three bonds of USD 400 million, USD 300 million, and 500 million euros
  • Menacorp wins Nasdaq Dubai equity futures trading simulation competition for brokers

June

  • China Construction Bank rings bell to celebrate listing USD 1.2 billion bond on Nasdaq Dubai

July

  • Futures traded value so far in 2017 rises above AED 250 million

September

  • Islamic Development Bank lists USD 1.25 billion Sukuk

October

  • MSCI and Nasdaq Dubai sign licence agreement to launch futures on MSCI regional equity indices
  • Investment Corporation of Dubai lists USD 200 million bond
  • DFM and Nasdaq Dubai sign licence agreement to launch futures on DFM General Index
  • ADX and Nasdaq Dubai sign licence agreement to launch futures on Abu Dhabi General Index
  • Islamic Development Bank rings bell to celebrate listing USD 1.25 billion Sukuk
  • Yinchuan Tonglian of China rings bell to celebrate listing USD 300 million bond

November

  • Nasdaq Dubai welcomes listing of USD 500 million Sukuk by APICORP
  • Emirates NBD rings bell to celebrate listing USD 750 million bond
  • Nasdaq Dubai launches futures on Emaar Development on day that it lists its shares on DFM
  • Nasdaq Dubai and Nairobi Securities Exchange sign MoU to support creation of Sukuk sector in Kenya
  • SICO UAE becomes Member of equity futures market

December

  • National Bank of Fujairah becomes first conventional bank to join Nasdaq Dubai’s Murabaha Platform
  • Nasdaq Dubai launches futures on ADNOC Distribution and Emaar Malls

Capital Admitted

Equities Traded Chart

No. Of Listings

Equities Traded Chart

Equities Trading

Value (USD) Volume (shares) No. of trades
2017 1.331 billion  273 million 29,518
2016 1.243 billion 138 million 22,913
2015 1.368 billion 219 million 30,637
Equities Traded Chart

FTSE NASDAQ DUBAI UAE 20 INDEX

The index edged down 0.1% over the year, from 3,294 at the end of 2016 to 3,289 at the end of 2017. It tracks 20 liquid stocks listed on Dubai Financial Market, the Abu Dhabi Securities Exchange and Nasdaq Dubai.

FTSE Chart

MEMBERS’ MARKET SHARE BY VALUE OF
EQUITIES TRADED, 2017

Most active 10 members by % traded value

Member % Traded Value
EFG-Hermes Brokerage 55.33
Arqaam Securities 16.06
Al Safwa Mubasher 11.81
Emirates NBD Securities 3.78
Mashreq Securities 2.18
Al Ramz Capital 2.10
Menacorp 1.69
Deutsche Bank 1.29
NBAD Securities 1.14
SHUAA Capital 0.76

Equity Futures Traded Contracts

Equities Traded Chart

MEMBERS’ MARKET SHARE BY VALUE OF
EQUITY FUTURES TRADED, 2017

Most active 4 members by % traded value (excluding market maker)

Member % Traded Value
Menacorp  62%
Integrated Securities 14%
Al Ramz Capital 12%
Al Safwa Mubasher 10%

SUKUK LISTINGS

Issuer Month Value (USD)
Investment Corporation of Dubai February 1 billion
Dubai Islamic Bank February 1 billion
Government of Hong Kong March 1 billion
Warba Bank March 250 million
Government of Indonesia March 1 billion
Government of Indonesia March 2 billion
Islamic Development Bank April 1.25 billion
Dar Al Arkan April 500 million
DAMAC April 500 million
Islamic Development Bank September 1.25 billion
APICORP November 500 million
Total   10.25 billion

BOND LISTINGS

Issuer Month Value (USD)
Industrial and Commercial Bank of China May 561 million
Industrial and Commercial Bank of China May 400 million
Industrial and Commercial Bank of China May 300 million
China Construction Bank June 1.2 billion
Investment Corporation of Dubai October 200 million
Yinchuan Tonglian October 300 million
Emirates NBD November 750 million

As the region's international exchange, Nasdaq Dubai provides us with excellent links to regional as well as global investors who wish to support our business and development activities in the Yinchuan area.

Zhang Honglin, Chairman of Yinchuan Tonglian

Chairman's Message

Abdul Wahed Al Fahim

ABDUL WAHED AL FAHIM
Chairman, Nasdaq Dubai

As well as expanding its markets in 2017, Nasdaq Dubai focused on strengthening many important relationships that will underpin its growth for years to come. Some of these connections are domestic, some international. All of them position the exchange to accelerate its mission to transform the capital markets landscape and promote prosperity, by offering investors effective tools for increasing wealth. Within the UAE, the signing of our licence agreements with Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX), which enable Nasdaq Dubai to offer futures on their equity indices, are an inspiring example of successful cooperation between different national entities. Nasdaq Dubai also signed an MoU with Dubai Land Department to streamline land-related capital markets transactions.

Internationally, an agreement reached with New York-based MSCI for futures on its GCC indices is highly significant, as is the increase in bond listings from China, which as the UAE’s largest trading partner is rapidly growing in importance to our nation’s future. Our Murabaha Islamic financing platform facilitated the first Sukuk issuance by the multilateral Africa Finance Corporation. We look forward to renewed growth in 2018 building on these and many other fruitful relationships with our UAE and international partners.

Business Review

by

Hamed Ali

HAMED ALI
Chief Executive Officer, Nasdaq Dubai

A key strategy of Nasdaq Dubai throughout 2017 was to develop and broaden our equity derivatives platform, following its successful launch in September 2016. We added more products, more brokers and a new market maker, while trading activity reached a total of AED 460 million over the year. Above all, we focused on expanding awareness of the market, as equity derivatives platforms in every part of the world typically take several years to achieve their full potential, and our own region will be no exception. Our programme of seminars and workshops for brokers was extremely well attended, reflecting their appetite for the new instruments, and we have encouraged the brokers’ own outreach to their customers to explain the valuable hedging, investment and leverage advantages that futures offer. With index futures in the pipeline for early 2018, the market is set for further growth.

Our other markets also developed strongly during 2017. The IPO of ENBD REIT confirmed the exchange’s leadership in the UAE in listing this young asset class. Total equities trading rose 7% on Nasdaq Dubai in a year when activity fell on many other regional exchanges. Another strong year for Sukuk and bond listings, at 10.25 billion US dollars and 3.71 billion US dollars respectively, maintained our expansion in the debt sector, with a diverse mix of issuers across many industry sectors and from countries around the world. Our Murabaha platform continued to develop, including welcoming its first conventional bank as a member. Nasdaq Dubai Academy again fulfilled its training mandate for hundreds of finance professionals across multiple capital markets topics.

Equity Derivatives

Amid active trading, Nasdaq Dubai increased the number of UAE companies on which single stock futures are offered from nine at the beginning of 2017 to 16 by year end.  The new additions were National Bank of Abu Dhabi (NBAD), Dubai Financial Market (DFM) and Dubai Investments (DIC) in April, followed by DAMAC Properties in May, Emaar Development in November, and then ADNOC Distribution and Emaar Malls in December.  The contracts on Emaar Development and ADNOC were launched on the same day that those two companies listed their shares following their IPOs, giving investors the opportunity to hedge or take an investment position from the outset.

The European Securities and Markets Authority (ESMA) opened the door in March to further growth in Nasdaq Dubai’s futures market, by granting recognition to the exchange’s clearing infrastructure. The ruling enables banks based in the EU to become Clearing Members on the exchange, which paves the way for increased participation by overseas banks and investors.

In October, Nasdaq Dubai announced agreements with MSCI,  DFM and ADX under which the exchange will create futures on their equity indices. Launch dates will be announced soon. These index derivatives will be a first in the region and will attract further international and regional participation in Dubai’s capital markets.  Equity indices are suitable in particular for large investors who wish to take a view on a whole market, rather than single stocks.    

Opening Futures Market

Robert Ansari, Head of MSCI for the Middle East, said: “The UAE equities market is one of the most important and vibrant in the Middle East and we are delighted to deepen our involvement with it as well as the markets of other regional countries.  As the region’s international exchange with global investor links, Nasdaq Dubai is the ideal partner for this project through our licence agreement.

NAEEM Shares & Bonds joined the futures market as a Member in January, bringing the total number of Members to eight. Al Ramz Capital joined as a market maker in February, becoming the second active liquidity provider.

Futures traded value in 2017 reached AED 464 million from 2.5 million contracts, amounting to significant activity in the first full year of a new market. The most heavily traded contracts were in Emaar Properties followed by Union Properties and then DAMAC Properties. The most active brokers during the year (excluding market makers) were Menacorp with a 62% market share, followed by Integrated Securities with 14%, Al Ramz Capital with 12% and Al Safwa Mubasher with 10%. SHUAA Capital was the most active market maker with a 91% share of market-making by value, followed by Al Ramz Capital with 9%.        

Equities

The IPOof ENBD REIT in March, raising 105 million US dollars, underlined Nasdaq Dubai’s leadership in expanding the opportunities for investors in the UAE‘s capital markets. Real Estate Investment Trusts (REITs) are a young asset class in the country and we are the only exchange that lists them. ENBD REIT, managed by Emirates NBD Asset Management and based in the DIFC, is Sharia’a-compliant and invests in commercial and residential property as well as buildings in other sectors such as healthcare and education.

Opening Futures Market

Tariq Bin Hendi, Director of ENBD REIT, said: "Our IPO on Nasdaq Dubai has been a great success and we are grateful to all parties involved in the process. Our rationale for the listing was to improve liquidity and allow greater flexibility in managing the REIT."

The IPO was facilitated by a Memorandum of Understanding signed in February by Nasdaq Dubai and the Dubai Land Department, aimed at streamlining land-related financial activities in the UAE.

As part of its ongoing engagement with UAE and overseas companies that are considering raising capital through a listing, Nasdaq Dubai held a workshop in March with Jebel Ali Free Zone (Jafza), to explain the benefits and processes of an IPO to Jafza-based companies. The seminar followed Jafza’s announcement of new regulations in January that enable companies there to carry out a stock exchange listing. 

While total equities traded value on the UAE’s three financial exchanges declined slightly in 2017, Nasdaq Dubai achieved an increase of 7% to 1.33 billion US dollars, up from 1.24 billion US dollars in 2016. Volume rose 98% to 273 million shares, up from 138 million. The most heavily traded stock on the exchange was DP World, Dubai’s largest company by market capitalisation, which reached its 10th listing anniversary in November. Al Ramz Capital became the fourth equities market maker on Nasdaq Dubai in February, and the following month SICO UAE and Daman Securities joined the exchange as the 33rd and 34th equities Members. The most active broker on the exchange by equities traded value in 2017 was EFG-Hermes, followed by Al Safwa Mubasher and Arqaam Securities.

The FTSE Nasdaq Dubai UAE 20 index, which tracks 20 liquid stocks listed on Nasdaq Dubai, DFM and ADX, ended the year at 3,289, down 0.1% from 3,294 at the end of 2016.

Sukuk and Bonds

Nasdaq Dubai listed 11 Sukuk with a total nominal value of 10.25 billion US dollars in 2017, maintaining its position as one of the most active exchanges in the world for new Sukuk listings.  Total current listed value on Nasdaq Dubai rose above 50 billion US dollars for the first time on any exchange, reaching 50.8 billion US dollars by year-end, up from 43.9 billion US dollars at the end of 2016.
Overseas issuers dominated during 2017, while UAE issuers were also well represented. Issuers ranged from governments and multilateral organisations to banks and property companies.  Nasdaq Dubai’s continuing appeal as a listing venue reflects our commitment to streamlined and flexible listing processes to meet the needs of issuers and their investors.     

The first Sukuk listing of the year was a one billion US dollar issuance in February by Investment Corporation of Dubai. This was the second Sukuk listing on the exchange from the principal investment arm of the Government of Dubai, following a 700 million US dollar listing in 2014. Also in February Dubai Islamic Bank listed a one billion dollar issuance in their fifth Sukuk listing since 2013, bringing the bank’s total listed value to 4.25 billion US dollars.

 In March the exchange welcomed the listing of a 1 billion US dollar Sukuk issued by the government of Hong Kong, following its two listings of 1 billion US dollars each in 2014 and 2015. The same month Warba Bank of Kuwait carried out its first listing on Nasdaq Dubai with a 250 million US dollar instrument. Also in March the Indonesian government brought two Sukuk to the exchange valued at 1 billion US dollars and 2 billion US dollars, making it the largest Sukuk issuer on Nasdaq Dubai by value with a total of 11.5 billion US dollars from eight listings.

In April, Islamic Development Bank (IDB) listed its eighth Sukuk on the exchange, a 1.25 billion US dollar instrument that raised its total listed value to 9.8 billion US dollars. Saudi Arabia construction company Dar Al Arkan listed a 500 million US dollar Sukuk in April, followed by UAE property company DAMAC Properties with a listing of the same size later that month.

Dar Al Arkhan Ringing
Yousef Bin Abdullah Al-Shelash, Chairman of Dar Al-Arkan Real Estate Development Company, said: “Our listing on Nasdaq Dubai, the international exchange based in our own region, provides us with excellent visibility to investors across the Middle East and around the world as well as a respected listing environment regulated to international standards.”

IDB returned to the exchange in September with another listing of 1.25 billion US dollars, while in November APICORP, the oil and gas development bank, listed a 500 million US dollar Sukuk, following its first listing of the same size in 2016.

 Nasdaq Dubai stepped up its policy of facilitating the growth of the Sukuk sector internationally during the year. In May we became founding members of a task force set up in Tunis together with the Tunisian government and Bourse de Tunis, with a remit to pave the way for the country’s first ever Sukuk issuance. In November we signed a Memorandum of Understanding with the Nairobi Securities Exchange to support the creation of a Sukuk sector in Kenya.

An active year for conventional bond listings was dominated by Chinese issuers, beginning with Industrial and Commercial Bank of China (ICBC) listing a 500 million euro (561 million US dollars) bond in May together with two bonds of 400 million US dollars and 300 million US dollars respectively. Ranked the world’s largest bank by market capitalisation in 2016, ICBC had earlier listed bonds of 500 million US dollars and 400 million US dollars in 2015 and 2016 respectively. In June 2017 China Construction Bank listed a 1.2 billion US dollar bond, its second on the exchange following its 600 million US dollar listing the previous year. Investment Corporation of Dubai listed a 200 million US dollar bond in October, adding to its 300 million US dollar bond listed on the exchange in 2014. The same month Yinchuan Tonglian Capital Investment Operation Company became the first Chinese entity from outside the banking sector to list a bond on Nasdaq Dubai with a 300 million US dollar issuance.  The company is based in Yinchuan, capital of the Ningxia Hui Autonomous Region, which hosts the annual China-Arab States Expo trade exhibition and has a substantial Muslim population.

IdealRatings Sukuk Index Announcement
Zhang Honglin, Chairman of Yinchuan Tonglian, said: "Our bond listing on Nasdaq Dubai strengthens the close relationship that China enjoys with the UAE and other Arab countries. As the region's international exchange, Nasdaq Dubai provides us with excellent links to regional as well as global investors who wish to support our business and development activities in the Yinchuan area."

Emirates NBD listed a 750 million US dollar bond in November. The bank is the largest issuer by value of conventional bonds on Nasdaq Dubai, with a total of 5.03 billion US dollars from eight listings.

Many of the Sukuk and bond listings during the year were marked by bell ceremonies at which senior representatives of issuers opened Nasdaq Dubai’s market. Regular attendees included His Excellency Essa Kazim, Governor of Dubai International Financial Centre (DIFC), Secretary General of Dubai Islamic Economy Development Centre (DIEDC), Chairman of Borse Dubai and Dubai Financial Market (DFM) and a Board Director of Nasdaq Dubai, as well as our Chairman Abdul Wahed Al Fahim together with senior executives from Nasdaq Dubai, DFM and DIEDC.

Murabaha

Nasdaq Dubai’s Murabaha Platform for Islamic financing maintained its expansion in 2017. The multilateral Africa Finance Corporation made its first use of the platform in February to facilitate the issuance of a 150 million US dollar Sukuk. In November, National Bank of Fujairah became the first conventional bank to join since the platform was launched in 2014, for use by its Sharia’a-compliant window NBF Islamic.

Total Murabaha transactions on Nasdaq Dubai increased by 18% in 2017 to 28.4 billion US dollars, up from 24.0 billion US dollars in 2016. The platform is used by banks and other financial institutions on behalf of individual as well as corporate clients. Established through a joint initiative with Emirates Islamic in 2014, the platform’s success reflects its substantial advantages over traditional Murabaha channels, utilising Sharia’a-compliant Certificates that are traded in Nasdaq Dubai’s Central Securities Depository (CSD). As well as providing Sharia’a certainty, the transactions can take place in minutes and are executed at a fixed price with no spread.

Academy

Nasdaq Dubai Academy delivered 21 training courses during the year, providing expert instruction in financial markets topics to more than 350 individuals, including employees of more than 30 companies. Equity futures training for brokers was a key topic, including workshops on index trading held in conjunction with DFM and ADX. The Academy also ran a simulated futures trading game in which more than 140 brokers from 12 brokerages took part.   

Other training topics ranged from Essentials of Capital Markets, Central Counterparty and AML,  Structuring Sukuk and Islamic Asset Management Products, to  training for CISI’s Islamic Finance Qualification (IFQ) and International Certificate in Wealth and Investment Management (ICWIM) exam. Customised courses were provided to brokers about REITs. The Academy certified 12 individual brokers from 6 Member firms as Trading Managers able to trade on the exchange.

Look Ahead

Our relocation to brand new and larger premises in 2018, in the DIFC’s The Exchange Building (Gate Village 11), heralds the next phase of growth for Nasdaq Dubai. We look forward to welcoming our existing and future business partners there, and in particular to our MarketSite, an events and TV space that we will develop into the region’s centre for capital markets thought leadership and media activity.    

Corporate Governance

This section provides an overview of Nasdaq Dubai’s governance during the year 2017. It explains how the Company applies principles of sound corporate governance to ensure an environment of strategic direction, performance, accountability and control in the business.

BOARD OF DIRECTORS

At the foundation of a well governed company is an effective Board that provides good leadership and oversight, within a framework of prudent and effective controls that enable risk to be assessed and managed.

The Nasdaq Dubai Board is committed to the highest standards of corporate governance and business integrity. The Board continues to ensure that we adhere to good governance principles and practices.

The Nasdaq Dubai Board represents and acts on behalf of its shareholders, Dubai Financial Market and Borse Dubai, and is committed to strong corporate governance policies, practices and procedures designed to make the Board more effective in exercising its oversight role for achieving the Company’s strategic objectives and for the stewardship of the Company’s resources.  The Board adopts the view that corporate governance should promote good performance and integrity as well as conformance with legislation and that effective governance practices enhance the Company’s ability to achieve its strategy and long-term success.

While the Board does not have responsibility for day to day management of the company, it stays informed about the company’s business and provides guidance to company management through periodic meetings and other interactions. In accordance with good governance practice, the roles of Chairman and Chief Executive are distinct and separate with a clear division of responsibilities. This separation of roles promotes more effective communication channels for the Board to express its views on Management. The Chairman presides over meetings and is responsible for the running and leadership of the Board and ensuring its effectiveness. The Chief Executive has delegated authority from and is responsible to the Board for managing the Company’s business. We believe that this separation of roles and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, succession planning, executive compensation and company performance.

The Board has adopted a formal schedule of matters specifically reserved for its decision-making, which includes the annual budget, strategy and long term business objectives, major projects and contracts and significant capital expenditure. The Board has created three Committees to ensure effective and efficient Board operations in accordance with their respective Charters.

During the financial year, the Board met on 4 occasions in person in Dubai. The Board has continued to oversee the Group’s strategy, risk framework and financial performance. The Board uses Nasdaq’s online board portal, Directors Desk for its meetings, which makes  make the board process efficient and has the benefit of considerable savings in resources, paper and printing.

The Nasdaq Dubai Board comprises 7 Non-Executive Directors including the Chairman, Abdul Wahed Al Fahim. Biographical details of the Directors and the Committees on which they serve are set out below.  The biographies demonstrate a wide range of experience and skills, including leadership and knowledge of corporate governance requirements and practices, enabling the Board members to discharge their responsibilities and to bring independent judgment on matters of strategy, performance and standards of conduct which are important to the success of the exchange.

BOARD CHARTER

Nasdaq Dubai’s governance framework is set out in its Board Charter.  The Charter details the corporate governance framework, coordinates and aligns supporting policy documents and establishes an environment that enables the Board and officers of Nasdaq Dubai to meet their responsibilities under the prevailing law and to demonstrate good governance practices.

NON-EXECUTIVE DIRECTORS / INDEPENDENCE

In accordance with Dubai Financial Services Authority (DFSA)  Authorised Market Institution regulation and the Articles of Association,  a sufficient number of Board members should  be  Independent Non-Executive Directors.  The Non-Executive Directors, four of whom are Independent, bring wide and varied commercial experience to the deliberations of the Board and its Committees.

An assessment of Directors’ independence is carried out on an ongoing basis and at appointment for new Directors. Each Director discloses their status i.e. independent or connected and has the opportunity to disclose changes in external directorships and other potential conflicts of interest. The Board ensures that there are sufficient number of Independent members at all times. The assessment was reviewed by the Nomination and Remuneration Committee and its recommendations were made to the Board for its approval.

A third of the Non-Executive Directors are subject to annual re-election by the shareholders at the Annual General Meeting.  In relation to Board remuneration, they receive an annual retainer together with meeting attendance fees for Board and, where applicable, Committee meetings.

BOARD AND COMMITTEE MEETINGS 2017

The Board held four scheduled meetings. A table of Board and Committee meeting attendance is set out below. Comprehensive Board and Committee papers, comprising an agenda and formal reports and briefing papers are sent to Directors in advance of each meeting. Each meeting includes a wide-ranging report from the Chief Executive, a report on the Nasdaq Dubai’s financial performance and reports from the committee chairmen.

During the year the Board considered the following matters: the review and approval of year 2016 results, and review of the Anti Money Laundering policy,  Finance policy, Personal Trading policy for Employees, Market Oversight Committee Charter and Nomination and Remuneration Committee Charter, additional banking arrangements, Cyber Risk, Value Added Tax and Budget 2018. When Directors have not been able to attend meetings due to conflicts in their schedule, they received the relevant meeting papers.

BOARD ATTENDANCE
  BOARD AUDIT & RISK MANAGEMENT MARKET OVERSIGHT NOMINATION & REMUNERATION
No. of Meetings: 4 4 4 4
Abdul Wahed Al Fahim 4 of 4 4 of 4 4 of 4 4 of 4
Edward Knight 4 of 4   4 of 4  
H.E. Essa Kazim 4 of 4      
George Möller 4 of 4 4 of 4  4 of 4  
Jamal Nasser Lootah 3 of 4 3 of 4   3 of 4
Majid Saif Al Ghurair 1 of 4      
Rashid Al Shamsi 4 of 4     4 of 4
BOARD COMMITTEES

Board Committees play an important role in the governance process and assist the Board in discharging its duties. 

The standing Committees of the Board include: the Audit and Risk Management Committee, the Market Oversight Committee and the Nomination and Remuneration Committee. The Chair of each Committee reports to the Board on actions taken at each meeting. Each Committee has the authority to retain independent advisers. Each Committee has its own Charter, providing written terms of reference that define its authorities, duties and membership.  In line with good practice, membership of the Committees is entirely non-executive and the majority are independent Directors.

 AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee is chaired by Jamal Nasser Lootah. The other members are Abdul Wahed Al Fahim and George Möller. The company secretary acts as secretary to the Committee. The Committee is responsible for the independent and objective oversight of internal control and risk management, internal compliance, governance issues, financial reporting, external and internal auditors and financial controls.

During the year, the Committee met on 4 occasions.  The Committee reviewed the annual budget, regular finance reports and the annual financial statements. The Committee recommended the annual budget and the annual financial statements to the Board for approval. The Committee met with the independent auditors, PricewaterhouseCoopers, to consider the results of the annual audit and to review the annual financial statements. The Committee reviewed the risk management reports from the Head of Market Operations and Risk and approved the Money Laundering Reporting Officer’s annual report. The Internal Audit function, which is provided by Dubai Financial Market, met regularly with the Committee which received the Annual Internal Audit Plan, progress on Internal Audit together with the Internal Audit reports following the completion of each audit. The Committee reviewed and recommended the Anti-Money Laundering Policy, Finance Policy, Personal Trading policy for Employees and additional banking arrangements to the Board.

MARKET OVERSIGHT COMMITTEE

The Market Oversight Committee is chaired by George Möller. The other members are Abdul Wahed Al Fahim and Edward Knight. The company secretary acts as secretary to the Committee. The Committee is responsible for the independent oversight of Market Regulation which includes Issuer & Market Surveillance and  Anti Money Laundering & Compliance functions. It also supervises the regulatory functions carried out by other areas of Nasdaq Dubai, including the application of the exchange’s Rules, Members' conduct of business and the clearing and settlement function.

During the year, the Committee met on 4 occasions.  The Committee met on each occasion with Market Regulation and received updates on regulatory and compliance matters, including feedback on regular meetings with the DFSA.   The Committee also received reports on any market incidents as part of its regulatory oversight function. The Committee reviewed and recommended for Board approval the extension of term of Practitioner Committee members.  The Committee discussed and received updates on the Sukuk market.  The Committee received the annual audit report for the Nasdaq Dubai Company Announcements and News Disclosure System. The Committee reviewed the annual budget and resources for Market Regulation and the Market Oversight Committee Charter. 

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee is chaired by Rashid Al Shamsi. The other members are Abdul Wahed Al Fahim and Jamal Nasser Lootah. The company secretary acts as secretary to the Committee. The Committee is responsible for new appointments to the Board, succession planning for the Board and executive management, and reviewing the independence of Directors. It is also responsible for recommending Non-Executive Directors remuneration for Board approval, approving performance measures and target setting for the Chief Executive and broad policies and programs for employee benefits.

During the year, the Committee met on 4 occasions. The Committee reviewed and recommended for Board approval amendments to the Human Capital Policy and program for employee benefits. It reviewed Director Independence, the Human Capital annual budget, set the targets and objectives for the Chief Executive and the Nomination and Remuneration Committee Charter.  The Committee received regular reports from Human Capital on key matters.

INTERNAL CONTROL AND RISK MANAGEMENT

Internal control aims to ensure that processes are in place to achieve a company’s business objectives. Internal audit provides assurances that these processes and controls are effective and being complied with. Through risk management, the company is able to identify, understand and manage risks to the business by reducing the probability that those corporate objectives are jeopardised by unforeseen events. 

INTERNAL CONTROL

The Board has overall responsibility for ensuring that Management maintains an effective system of internal control and for reviewing its effectiveness. Such a system is designed to support the identification and management of risks affecting Nasdaq Dubai and the business environment in which it operates. Nasdaq Dubai operates a system of internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating and managing the significant risks facing the exchange. The Board, through the Audit and Risk Management Committee, regularly reviews these processes. The effectiveness of controls is periodically reviewed within the business areas. Regular reports are made to the Audit and Risk Management Committee by Management, Internal Audit, Head of Risk Management and Head of Compliance covering matters such as financial controls, compliance and operational controls. The Audit and Risk Management Committee monitors resolution of any identified control issues of significance through to a satisfactory conclusion.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. In accordance with International Financial Reporting Standards (IFRS), the internal control over financial reporting is a process designed under the supervision of the Chief Executive and the Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes.

Nasdaq Dubai’s internal control over financial reporting includes policies and procedures to provide for the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with authorisations of Management and the Board; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Management assesses the effectiveness of internal controls to satisfy itself that the processes followed are effective. The system of internal financial and operational controls is also subject to regulatory oversight by the DFSA.

INTERNAL AUDIT

The purpose of the Internal Audit function is to assist the Board and Management in the effective discharge of their fiduciary and administrative responsibilities by providing independent, objective assurance and consulting services with respect to evaluating risk management, control, and governance process. To ensure independence and objectivity, Internal Audit reports directly to the Audit and Risk Management Committee. For administrative matters the Head of Internal Audit has a secondary reporting line to the Chief Executive Officer. The Internal Audit function adopts standards issued by the Institute of Internal Audit (IIA). Internal Audit services are provided by Dubai Financial Market which follows a risk based audit approach. An annual risk based internal audit plan is prepared based on risk factors with input from Management and other stakeholders. All key areas subject to high risk such as compliance, financial, information technology and operations are included in the plan while the non-priority and low risk areas are excluded. During the planning process key business areas and operational risks are identified, compiled, risk rated and ranked to draw a final risk assessed audit scope of work that factors in high and medium risk areas. The audit plan, submitted to the Audit and Risk Management Committee for approval, provides information about the risk assessment, the current order of priority of audit projects and how they are to be carried out. The audit plan outlines the key departments, activities and processes to audit and estimated start dates and completion timelines. The Internal Audit submits regular activity reports to the Audit and Risk Management Committee and Management summarizing the results of the audit assignment including significant risk exposures and control issues and follow up on the issues raised in the audit report. Internal Audit liaises regularly with internal stakeholders to maintain and uphold communication and relationship to a high level. The key internal stakeholders include compliance, company secretariat and risk management functions.

RISK MANAGEMENT

Risk management is a systematic and continuous process which aims to identify, evaluate, manage, control and report significant risks to which Nasdaq Dubai may be exposed. Nasdaq Dubai has appointed a Risk Officer with overall responsibility for the risk management function and for overseeing the implementation of the risk management strategy on behalf of the Nasdaq Dubai Board. Management within each unit and function are responsible for establishing and maintaining pertinent risk management. The functions and systems for internal control and internal audit are part of the overall risk management process.

Nasdaq Dubai’s Exchange, Clearing and Central Securities Depository operations place significant emphasis on managing risk, including business continuity and default management. Nasdaq Dubai’s RMF is subject to specific regulation and supervision by the DFSA. In operating a Clearing House, Nasdaq Dubai acts as the Central Counterparty (CCP) to transactions executed on the Exchange between Member firms. As a CCP, Nasdaq Dubai is exposed to various clearing related risks, including Counterparty Risk, Credit Risk and Liquidity Risk. The Head of Market Operations, in consultation with the Risk Officer, is responsible for implementing the Board’s strategy for monitoring, managing and mitigating these risks.  One primary risk management tool is the requirement placed on Clearing Members to provide margin payments and collateral to Nasdaq Dubai in accordance it Business Rules. In addition to the collateralisation of obligations, other risk management tools adopted by the Board include rigorous Clearing Membership standards, dedicated clearing capital, netting arrangements and advanced risk management monitoring techniques.

CORPORATE RESPONSIBILITY

Corporate responsibility has become embedded in the mainstream of corporate governance thinking. Nasdaq Dubai is committed to the highest ethical standards of professional conduct and integrity. The Board continues to ensure that we adhere to good governance principles and practices. In order to meet this objective, employees are required to comply with the spirit and letter of the company’s Code of Ethics and Conduct.  Our people are at the heart of what we do and drive the success of our business. Attracting, developing and retaining the skills we need to deliver on our strategy is important to Nasdaq Dubai.

From an economic and social perspective, Nasdaq Dubai enables companies to access funds for growth and development. Due to the nature of its business, Nasdaq Dubai does not have a high environmental impact. Its principal impact arises from energy, paper and water consumption. In an effort to responsibly manage this impact, we encourage a reduction in energy wastage and focus on recycling.

In order to take advantage of technology and the benefits of the internet, Nasdaq Dubai continues to publish its Annual Review online. This provides convenient access to information about the Company and reduces our consumption of paper in line with our corporate responsibilities.

- Corporate Responsibiliy -

Nasdaq Dubai is committed to the highest ethical standards of professional conduct and integrity. In order to meet this objective, employees are required to comply with the spirit and letter of the company’s Code of Ethics and Conduct.