broker user guide

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Abu Dhabi Securities Market - Brokers User Guide

ABU DHABI SECURITIES MARKET

Brokers User Guide

November 2000

The International Securities ConsultancyNovember 2000


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Table of Contents

INTRODUCTION ....................................................... .............................................................. ........................... 4

THE ABU DHABI SECURITIES MARKET (ADSM)......... ........................................................... ............................ 4THE BROKERS USERGUIDE ..............................................................................................................................5LEGAL STRUCTURE....................................................... ........................................................... ........................... 5

CUSTOMERS........... ................................................................ .......................................................... .................. 7

CUSTOMERCONTACT ................................................... ........................................................... ........................... 7

NEW CUSTOMERS ......................................................... ........................................................... ........................... 8ALL CUSTOMERS ..............................................................................................................................................11TAKING INSTRUCTIONS.....................................................................................................................................13TRADE CONFIRMATION ....................................................................................................................................14

COMMISSION AND CHARGES.............................................................................................................................15

STOCK MOVEMENT.......................... ........................................................... .................................................. 16

LODGING CERTIFICATES AT THE ADSM...........................................................................................................16

TRANSFER OF SHARES TO TRADING ACCOUNT.................................................................................................16TRANSFER OF SHARES FROM TRADING ACCOUNT ............................................................................................17TRANSFER OF SHARES FROM/TO ANOTHERBROKER........................................................................................17RE-CERTIFICATION ...........................................................................................................................................17PLEDGING........................................................... ........................................................... ................................... 17CHANGE OF DETAILS ........................................................................................................................................18

TRADING ........................................................... ............................................................ .................................... 19

TRADING FLOOR...............................................................................................................................................19ORDERPROCESSING .........................................................................................................................................19TRADING ERRORS.............................................................................................................................................21TRADING EX-BENEFIT .......................................................................................................................................21SUSPENSION OF TRADING .................................................................................................................................21

UPDATE OF ACCOUNTS .....................................................................................................................................22TRADING LIMIT ................................................................................................................................................22TRADING REPORTS ...........................................................................................................................................24

SETTLEMENT......................................................................... ........................................................... ............... 25

SETTLEMENT WITH THE CUSTOMER..................................................................................................................25DELIVERY OF STOCK........................................................................................................................................25CASH SETTLEMENT WITH THE ADSM......................................................... ..................................................... 25FAILURE TO PAY...............................................................................................................................................26

STATEMENTS OF ACCOUNT .......................................................... ............................................................. 27

OFF-MARKET TRANSFERS ....................................................... ............................................................ ....... 29

PERMITTED OFF-MARKET TRANSFERS .............................................................................................................29

BENEFITS AND STOCK EVENTS.......................................................... ....................................................... 30

CASH BENEFITS ................................................................................................................................................30STOCKBENEFITS ..............................................................................................................................................30

BENEFITS WITH AN OPTION TO CHOOSE ...........................................................................................................30STOCKEVENTS .................................................................................................................................................30APPENDIX A FORMS ......................................................................................................................................31



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APPENDIX B CODE OF CONDUCT AND CUSTOMERAGREEMENT.................................................. .................. 32APPENDIX C POWER OF ATTORNEY ..............................................................................................................49



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IntroductionThe Abu Dhabi Securities Market (ADSM)

The ADSM exists to provide opportunities for, and promotion of, investment of savings and

funds in securities, thereby benefiting the national economy. In order to ensure that the

national securities market is based on, and complies with, international standards, the laws of

the United Arab Emirates and Abu Dhabi impose various controls over the buying and selling

of securities. One very important aspect of the law is that it requires that all trading in listed

securities take place through licensed brokers on the floor of the ADSM. The UAE Securities

and Commodities Authority acts as the regulatory body supervising the market. In addition,

the ADSM itself has rules that lay down more precisely the practices that should be used

when participating in the securities market.

Brokers must comply with these rules if they wish to trade in securities in Abu Dhabi.

Participation in the ADSM is restricted to broking firms that meet the entry criteria referring,

amongst other things, to registration with the Authority, capitalisation, and numbers of

trained staff. Brokers may only trade on behalf of customers, and not on their own behalf, i.e.

they may trade as agents but not as principles.

Companies that wish to list on the ADSM must also have approval from the Authority.

The market operates on the basis of book entry transfer. This means that, as a general rule,

certificates are not issued to investors. All records of ownership are held in the ADSM

systems. Certificates will only be issued under exceptional circumstances, for example, in

order to allow the holder to pledge his securities against a loan. However, only securities that

are lodged with the ADSM can be traded. Investors intending to trade on the ADSM need to

have a unique identification number, which will be issued to them on production of certain

personal identity documents. They also need to lodge certificates for any securities they

already own with the ADSM before they can sell these securities.

Trading on the ADSM is by automated order matching. (The computer system is called

Horizon.) This means that brokers enter buy and sell orders into the system, on behalf of theircustomers, and orders are matched using time and price priority rules. These ensure that

investors receive the best possible terms for their trade that are available in the market at that

time.

Clearing, settlement, depository and registration functions are also automated. (This

computer system is called Equator.) Settlement of trades takes place between brokers and the

ADSM on the business day after trading, which is known as T+1. All cash settlement is

carried out through one specified settlement bank the National Bank of Abu Dhabi.

The International Securities Consultancy Page-4November 2000


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The Brokers User Guide

The purpose of the Brokers User Guide is to describe to ADSM brokers how to buy and sellshares on the ADSM on behalf of their customers. It describes:

the communications the broker must have with his customers;

the interactions he will have with registrars and banks;

the processes he will use to communicate with the ADSM; and

compliance with the ADSM rules and the Code of Conduct.

The ADSM rules and the Code of Conduct lay down in formal terms precisely what

minimum practices brokers must adhere to. The User Guide should help brokers, in a

somewhat less formal manner, with their day-to-day operations.

The User Guide does not give technical details on how to input trades, print out reports, or

other system features. This information is to be found in its entirety in the System Manuals

provided with the Horizon and Equator computer systems, which are supplied by efa.

Legal Structure

In order to ensure that the national securities market is based on, and complies with,international standards, the laws of the United Arab Emirates and Abu Dhabi impose various

controls over the listing, buying and selling of securities. The UAE Securities and

Commodities Authority acts as the regulatory body supervising the market, which is

governed by the following laws, regulations and resolutions:

Federal Law No. (4) of 2000 concerning the UAE Securities and Commodities

Market & Authority;

Emirate Law No. (3) of 2000 concerning the Establishment of the Abu Dhabi Stock

Exchange;

Council of Ministers Resolution No 384/10 of 2000 concerning the Regulations

regarding the Licensing and Supervising of the Stock Market;

Securities And Commodities Authority Resolution concerning Regulations Relating

to Brokers; and

Council Of Ministers Resolution No 12 of 2000 concerning the Regulations for

Listing Securities and Commodities.



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In addition, the ADSM itself has rules, which lay down more precisely the practices that

should be followed in the securities market. Brokers must comply with these rules if they

wish to trade securities in Abu Dhabi.

Companies that wish to list on the ADSM must have approval from the Authority and the

companies, and their registrars, must also follow the Authority regulations and the rules of

the ADSM to obtain and maintain their listing on the market.

A significant new legal provision is that all trading of listed securities must now be carried

out on the ADSM and off-market trading of such securities is prohibited. This means that all

trading of listed securities in Abu Dhabi must be executed through the ADSM systems and

procedures.



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CustomersCustomer Contact

Licensed Representatives

Under the new laws, regulations and rules, only broking firms belonging to the ADSM may

trade securities that are listed on the ADSM. All trading in these securities must be carried

out on the ADSM. In addition, only licensed representatives of these firms may act for and

advise customers, and enter trades into the ADSM systems. In order to become a licensedrepresentative of a firm, the individual concerned must undergo training and pass an exam at

the end of the training.

Brokers must advise the ADSM if a representative leaves and give the reason for leaving. The

ADSM will not permit a person to become a representative with another firm if he is

dismissed from the original firm for bad conduct.

If a licensed representative of one firm leaves the firm and joins another, he will have to take

the exam again, as the license is linked to the firm he represents. Similarly, if a broker leaves

the ADSM then all his representatives cease to be licensed.

The Code of Conduct

The Code of Conduct (Appendix B) gives precise details of the dos and donts when dealing

for customers. However, it can be summarised as: Always act honestly and in your

customers best interests; dont do anything which might be construed as damaging to your

customers, to other brokers or to the market generally.

Segregated Bank Accounts

One of the most important concepts and principles of the ADSM is that of investor

protection. For that reason, it is one of the ADSM rules that all customer money received and

held by the brokermust be kept in a segregated bank account. This is to ensure that in the

event of the failure of the broker, money belonging to customers is not used to pay the

brokers debts, and can be recognised as belonging to his customers. The rules also say that

the broker must pay a reasonable amount of interest to the customers who have money in

these accounts. Since the broker will generally keep one segregated account for all his

customers funds, it is also vital that the firms books of account show clearly how much

belongs to each customer.



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Current Customers

Brokers who have traded securities in the past will already have a number of customers, or

customers, for whom they have acted prior to the introduction of the ADSM. However, in

order to act for these customers on the ADSM, brokers will need to go through the same

initial processes that they will have to carry out for completely new customers. This means

setting up customer agreements and obtaining identification numbers, which they will need

when trading in the new environment.

New Customers

Investor Number (IN)

Before a broker can open an account for a customer, he must ensure that the investor has an

IN. Investors may apply directly to the ADSM. Alternatively individuals that have a Family

Book and companies incorporated in Abu Dhabi may use any bank that has signed an

agreement with the ADSM. However, if the investor does not have an IN, then the broker can

assist him in obtaining one.

The IN acts as a personal, unique identification number within the ADSM systems for the

investor. Each investor has only one IN and all his holdings can be identified as belonging to

him. This enables the ADSM to provide individuals with composite statements of theirholdings in all companies, even if they have dealt through different brokers.

To obtain an IN the investor must complete an IN Application form (see Appendix A) and

will need to present the following forms of identification:

Individuals who are Abu Dhabi nationals;

- Family Book;

- Passport;

Companies:

- the Certificate of Commercial Registration/Trading Licence

- Chamber of Commerce Licence;

- Memorandum and Articles of Association;/Contract of Establishment with all

amendments;

- List of authorised signatories;

- Copy of Board resolution authorising IN application:

Governments



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- a copy of .Law or Royal Decree establishing the Ministry;

- a copy of the documents appointing the board of directors; and- a copy of the authorised signatories.

For individuals, the Family Book is of particular importance as the IN is formulated around

the Family Number. If the customer does not have a Family Book and therefore a Family

Number, he must apply for one from the civil authorities. It is understood, however, that there

may be instances where the person concerned must be treated with particular sensitivity, and

there is no higher authority to appeal to for production of the Family Number. In such a case

the ADSM will allocate a number randomly from a bank of numbers kept for this purpose

and the IN will then be formulated as if this were a Family Number. However, it should be

emphasised that this method will only be used in exceptional circumstances and most

customers should either have a Family Number already, or apply for one in the usual way.

When acting for foreign investors or nationals, who do not have a Family Book, the broker

should contact the ADSM to discuss the documentation that will be necessary to allocate an

IN.

When a broker is assisting an investor to apply for an IN, then the broker should take copies

of the relevant documentation and sign and stamp them to evidence that the broker has seen

the original documents. He should then take the completed application forms and copy

documents to the ADSM and will be required to pay Dhs 5 for each application. The ADSM

will process the application and return the application form to the Broker with the IN written

on it. They will also post a card, with the IN shown on it, directly to the investor, byregistered post.

The Customer Agreement

In order to trade for a new customer, the broker must first set up a Customer Agreement with

him. This ensures that both the broker and the customer know and understand the terms on

which they will do business with each other.

It is usual for the Customer Agreement to specify a number of details, including:

whether the customer authorises the broker to carry out trading on his behalf only

against specific instructions or whether the broker has any discretion;

by what method the customer will give the broker his order, e.g. in person only, by

telephone with a follow-up written confirmation, fax, etc.;

how the customer will receive confirmation of his order;



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whether or not the broker expects to receive money from his customer before agreeing

to buy securities for him;

if he agrees to trade before receiving funds, how soon after the trade must the

customer provide the necessary amounts to satisfy the purchase;

how soon after a trade has been successfully executed will the customer be notified;

how soon after selling stock the customer should expect to receive the proceeds;

the amount of commission and other charges the customer will have to pay on any

trade;

that the broker has the right to sell securities he has bought on behalf of the customerif the customer does not pay what is due to the broker;

that all the customers personal details, including his trading activities and securities

holdings are entirely confidential and may not be disclosed to any unauthorised

person by the broker;

that the broker will use his best endeavours to get the best possible price for any trade

he carries out for the customer, and that he will attempt to carry out the trade as soon

as possible after receiving the order;

the timing and frequency of the issue, by the broker, of statements of account, both

cash and stock.

Brokers should bear in mind that settlement on the ADSM is on T+1, which means that

brokers must pay for stock purchased on the day following the trade, regardless of whether

the customer has paid the broker. For this reason, brokers may wish to obtain at least a

margin of cash from their customers prior to carrying out a purchase order.

The Customer Agreement also contains details of some of the legal obligations and

constraints upon each party. For example, customers may not attempt to sell shares to which

they do not have legal title; and the broker will not buy or sell shares in the customers namewithout his full permission to do so.

Finally, the Agreement must include a Risk Disclosure Statement. This is designed to

ensure that the customer is aware of the risks inherent in investing in securities, and that there

is no guarantee that he will make a profit rather than a loss as a result of his investment.



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The Code of Conduct shown in Appendix B contains a sample Customer Agreement.

Brokers may use this agreement or one that is modified to meet their own internal policies

and procedures. However any agreement prepared by the broker must include the content ofthe agreement shown in Appendix B.

Opening an Account

After ensuring that the customer has an IN and obtaining the customers signature on the

Customer Agreement, the broker is able to open an account within the system. The data is

entered into the Equator system by the broker.

Under the current Law, transfer of ownership of shares can only be legally completed if a

transfer form is prepared and signed by both the buyer and the seller. To enable settlement totake place within the system by book entry transfer, each investor must provide a power of

attorney (Appendix C) to enable the ADSM and another (one for the buyer and one for the

seller) to sign a transfer on behalf of the investors. This will ensure that the investor has legal

title to the shares he buys, even though they are held within the ADSM system and he does

not hold a share certificate. The power of attorney will only be used to validate the transfer of

securities within the ADSM systems and for no other purpose. The original power of attorney

must be lodged with ADSM prior to any orders being executed on the account. The ADSM

will stop trading on any account where a Power of Attorney has not been received.

Sometimes a group of investors may to hold shares jointly, that is, they each want to have

equal ownership rights to the shares, or, more likely, a group of people may become jointowners of a share holding as a result of an inheritance. In these cases each individual must

have an IN. However the group will need to nominate one of themselves as their

representative and signatory on the account, and each member of the group must provide a

power of attorney to this effect. The broker can then set up a joint account for those

concerned and shares bought for that account will be owned by the group.

Pledging

Under current law, pledges of shares can only be legally enforced through the use of share

certificates and by recording the details of the pledge on the register of members. However,there is nothing in the law which prevents brokers, their customers and pledgees from making

appropriate arrangements for safeguarding the positions of all parties, while still trading and

settling in dematerialised form. For example, brokers might open an account for the investor

which can only be used with the permission of the pledgee, and where any resultant funds are

remitted to the pledgee.

All Customers



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Know your customer

Brokers are advised to get to know their customers and to have as much relevant informationabout them, their investment objectives, and their business dealings as possible. This will

enable the broker to provide customers with the best possible advisory services and to build

an atmosphere of mutual trust between broker and customer. This information should be

reviewed and kept up to date on a regular basis as a customers needs and situation may

change from time to time.

Brokers must file a copy of each completed customer agreement and must ensure that it is

periodically updated with new information about the customer. In some cases the new

information will be significant in terms of the investors objectives.

Significant changes would include the following:

a change in marital status;

a change relating to a second person who is allowed to place orders;

a change in account name;

the investor becoming an insider, i.e. the chairman, board member or an employee

of a listed company; and/or

a major change in the net worth or annual income of the investor.

In these cases, brokers must ensure that a new customer agreement is prepared and signed by

the customer.

Non-paying customers

In order to ensure that customers who do not meet their liabilities do not move from broker to

broker, brokers must advise the ADSM of the names of such customers. The ADSM willkeep a record of these names and brokers may check with the ADSM before taking on a new

customer.

Portfolio Record

Once the broker starts to trade for a customer, he should maintain a portfolio record for him.

This will give details of the customers initial holdings and all trades carried out thereafter. In



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this way, the broker will always have an up-to-date picture of the customers investments and

will be able to advise him about further trading.

Security Cross Reference

In addition to the portfolio record, brokers are required to maintain a security cross-reference.

This is an alphabetical list of securities. Under each security are shown the names of each

customer. This list should be updated following each days trading. This data will provide the

broker with an accurate list of customers who could be contacted if important or price

sensitive information is revealed concerning that security.

Taking Instructions

The broker can take instructions from the customer either in writing, by phone, fax or email,

but must be able to prove that the customer did give him such an order. The rules state that

any one of the following will be considered proof that the order was given:

the customers signature on the instruction form;

a recording of the telephone conversation during which the customer gave the order;

faxes or emails giving the instructions that can be proved to be authentic.

In all cases the ADSM rules require that the following information is recorded and retained

by the broker:

date and time of receipt of the instruction;

customers account number;

name of the company and the security;

whether it is a buy or sell instruction;

number of securities to which the instruction relates;

pricing instructions;

nature and duration of validity of the instruction;

means of authorisation; and

any special instructions.



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If the client is present, he should be asked to sign an order form. Whether or not the client is

present, the rules clearly place the onus of proof on the broker to show that he hadauthorisation from his customer to carry out the trade, in the event of any dispute. The broker

is responsible, for this reason, for obtaining the signature of his customer on the written

authorisation, or recording orders received by telephone, and for archiving copies of these

authorisations. He must also endeavour to verify orders received by fax or email and again,

retain proof that he has done so. The broker must also be able to prove that he received any

amendments or cancellations in the same way.

All trading is required to take place on the trading floor and only licensed representatives are

permitted to take orders from customers. However brokers may wish to have licensed

representatives available to meet customers, in offices away from the trading floor. This is

permissible provided that all orders are passed to a representative on the trading floor forexecution.

Brokers must ensure that the customer understands what is expected of him regarding prompt

payment etc. Where the customer agreement specifies that funds must be available before an

order is accepted, the broker must check that the customer has sufficient funds to meet his

commitments before trading.

Trade Confirmation

When an order has been executed or partially executed the broker must inform his customer.

If the customer is present on the trading floor, he can tell him immediately. In other cases the

broker may telephone or fax. In all cases, the office must send out a written confirmation of

execution to the customer before the end of the day. The confirmation must give all the

details of the trade, including the following:

the name of the ADSM broker and its address;

the full name of the listed company and the security;

the type of transaction undertaken, sale or purchase;

the number of securities sold or purchased;

the price of the security;

the aggregate value of the transaction;

commission and any other costs;

the total amount to be paid or received by the customer,



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statements indicating that:

- the ADSM broker is licensed by both the Authority and the UAE Central

Bank;

- the ADSM broker is licensed by ADSM to offer brokerage services to clients

in respect of the types of securities being traded; and

- the transaction has taken place in accordance with these rules and all

applicable laws.

This confirmation may act as an invoice to the customer for the sums due, unless the broker

has procured the funds prior to trading, in which case it will show by how much thecustomers cash account with the broker has been depleted.

Commission and Charges

The confirmation to the customer must show clearly how much was paid or received for the

securities, and how much was charged for commission and any other charges.

The law states that commission and other charges payable by the customer are as follows:

transactions worth less than Dirhams 15,000 attract a commission to the broker of

Dirhams 75;

on transactions with a value greater than 15,000 Dirhams, the broker must charge to

customer 0.5% of the value of transactions of a value.

The Law also requires that the broker pays a portion of this commission to ADSM and the

Authority. ADSM will collect both portions and pay the required amount to the Authority.

The amounts laid down in the law are as follows:

ADSM is entitled to:- Dhs 22.50 on transactions with a value of Dhs 15,000 or less; and

- 0.15% on the value of transactions, which have a value of more than Dhs

15,000.

the Authority is entitled to:

- Dhs 7.50 on transactions with a value of Dhs 15,000 or less, and

- 0.05 on the value of transactions, which have a value of more than Dhs

15,000.



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Stock MovementLodging Certificates at the ADSM

Investors are encouraged to lodge certificates with the ADSM so that they can be traded in

book entry form at any time. Before securities can be lodged, investors must obtain an IN.

To lodge stock, investors complete a Stock Lodgement form (Appendix A) and take the form,

their share certificates and any other documentation that may be required by the to the

relevant company registrar. Brokers may, of course, assist their customers in this area. When

stock lodgement is complete stock will continue to be held in the name of the investor but

ADSM will produce, and sign under a power of attorney from the company, an internal share

certificate. Stock may then be transferred to the control of a broker (see below) and then sold.

At this stage the ADSM will produce, and sign under a power of attorney, a stock transfer

form. Therefore ADSM will require no further documentation from the investor when they

sell. (Brokers, must however, obtain evidence of the investors instructions as explained in the

previous section). The legal documentation to be produced when stock is lodged must

therefore be sufficient to authorise the transfer of shares following a sale, except for the stock

transfer form, which will be produced by ADSM when the sale actually takes place.

The registrar will review the certificates and other documentation and confirm to ADSM that

the stock is good delivery. The registrar will then cancel the original certificate but continueto hold the shares in the name of the investor. Securities that are in this form cannot be

traded. They may only be:

transferred to a broker following the lodgement of a Customer Transfer form (see

below);

transferred to another investor as a result of a valid off-market transfer;

re-certificated (see below).

Transfer of Shares to Trading Account

Before an investor may sell shares the securities must be in the trading account of a broker.

When an investor buys the securities are automatically added to the trading account and,

unless the investor instructs a transfer out of that account, are available for trading. However

where the investor has lodged share certificates with the registrar then the investor must also

authorise the transfer of shares to the brokers trading account. To effect the transfer the

Broker should obtain the customers signature on a Customer Transfer To Broker form (see

Appendix A), sign and stamp to form himself and lodge it at ADSM. The ADSM will transfer

the shares to the trading account. The shares can then be traded.



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Transfer of Shares from Trading Account

Investors may, if they wish, request ADSM to transfer shares from the Trading Account of a

broker by completing a Customer Transfer From Broker (see Appendix A). On receipt of this

form, ADSM will check that the broker has no valid objection to the transfer and then move

the shares. Once shares have been moved out of a trading account they are ineligible for

trading.

Transfer of Shares from/to Another Broker

Sometimes one of your customers may decide to transfer shares from another broker to you.

This may happen when a customer first opens an account with you or at some later stage. To

action the transfer you will need to take a signed letter from the investor to the ADSM. The

ADSM will check with the other broker that he has no claim on the securities against unpaid

amounts. Provided the stock is not being used as a lien then the ADSM will transfer the

shares to you. This will result in the transfer of shares into the investors account that is under

your control.

Conversely, one of your customers may decide to transfer shares to another broker. In this

case the ADSM will check with you before transferring the shares.

Re-certification

The transfer and ownership of securities, on the ADSM is achieved and evidenced by book

entries in the automated accounts held in the ADSM system. Investors will therefore be

discouraged from requesting the issue of a certificate by the company. However, if an

investor insists that he be given one, that is his right under current law. There are also some

cases where an investor may need to have a certificate for perfectly valid reasons. For

example, at the moment, in order to pledge his stock, he is required by law to give his

certificate to the pledgee. Thus, investors will still require certificates from time to time.

When this happens, the request will be made to the ADSM by the investor (or the broker on

his behalf) using a Certificate Request form (Appendix A). If stock is in a trading account

then the ADSM will transfer the shares out. They will then forward the completed CertificateRequest form to the registrar to request that the registrar issue and the company directors sign

a certificate in the name of the investor. Registrars will send the signed certificate directly to

the investor.

Brokers are advised to make sure that customers understand that certificated stock cannot be

traded and that it must be lodged with the ADSM again when they wish to sell.

Pledging



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The Law related to pledges has not yet been changed. An investor that wishes to use

securities as a pledge must therefore surrender his certificate to the pledgee and record the

pledge on the register. When the registrar receives a pledge instruction or release pledgeinstruction, these are processed as today. However the registrar must instruct ADSM to

record the pledge on the register records. Securities within a trading account cannot, at this

stage therefore, be used as a legal pledge.

However, In system terms it is not necessary for investors to have certificates in order for a

pledge to be recorded on the register and for securities to be held to the order of the pledgee.

Brokers may therefore make arrangements with their customers and with third parties to

ensure that securities are not moved without the consent of the third party.

Change of Details

When a trade takes place on the ADSM, the holdings in the investors trading account, which

is under the control of the broker, is updated. However the register is also written up to reflect

the change in legal ownership. The registrar will use the information on the register to

distribute dividends and other company information and rights, such as proxy voting forms. It

is therefore very important that any changes to investor details, which are known to the

broker, should be advised to ADSM so that the register details can also be updated. Brokers

should advise ADSM using a Change Details form (see Appendix A).



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TradingTrading Floor

Each broker will be allocated a trading booth on the trading floor. No more than three

brokers representatives, as well as the office manager, are allowed in the booth at any one

time. No customers are permitted to enter the trading booth. No food or beverages are

permitted to be taken into the trading booth. Smoking is not permitted in the trading booth.

The trading floor will be open from 8.00 am until 2.00 pm for five days per week (Saturday

through Wednesday). Trading will take place from 9.30 am until 12.00 noon on each day,

with a pre-opening session between 9.00 am and 9.30 am and then continuous trading from

10.00 am until 12.00 noon. The Horizon manual explains in detail the processes that are

undertaken during pre-opening, opening and continuous trading.

Between 8.00 am and 2.00 pm the system will be available to brokers to enable them to make

enquiries, download reports, open accounts etc. However, brokers are not permitted to print

reports from the trading system between 09.15 and 12.05. This is to ensure the maximum

system performance during periods of high trading volumes.

At least one brokers representative is required to be present in the trading booth during

trading hours.

The trading booth will be equipped with workstations. No external programs are permitted to

be loaded onto these workstations and all maintenance and updating work will be carried out

by the ADSM.

Order Processing

Types of Order

There are various types of order a customer may give a broker and which can be

accommodated by the ADSM trading rules and system. Additionally, the system allows thebroker to add some conditions to the orders if required. The full list of these can be found in

the system manual, but most commonly a customer will give his broker the following kinds

of instruction.

Limit Order: a Limit Order is an order to buy or sell a stated number of shares at a

specified price, or better;

Market Order: a Market Order is an order to trade a security immediately at the

current best price available in the market;



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Hit Orders: these enable the customer to tell the broker that he wants to sell as much

of his stock as can be sold at the best price available in the market;

Take Orders; alternatively these enable him to ask the broker to buy all of the

volume of a particular stock available at the best market price;

All or None Orders : these enable the customer to trade only if the entire volume of

his available stock is bought/sold, although in this case the trade may be with more

than one counterparty;

Whole or None Orders: this is used if he wishes the entire volume to trade with only

one counterparty; (Has been removed from the ADSM trading rules)

Fill or Kill Orders: this is used if the customer requests that the order is cancelled if

an immediate trade is not possible;

Minimum Fill Orders: these are used if the customer specifies that a minimum

number of shares out of the whole order must trade the first time the order is

submitted; thereafter, the order is filled according to market forces;

Minimum Block; this is similar to minimum fill except that the customer specifies

that he wants his order to be traded in minimum sized blocks of shares,

Stop Loss Order; this is used to enable customers to limit the amount of loss that

might occur on an investment, or to protect a profit, it is an order to sell, which is

activated when the stock price declines to, or below, a stated trigger price.

Amend or Cancel Orders

The customer may decide that he wants to change his order in some way, or cancel it

completely. This can be done provided the order has not already been executed.

As mentioned above, brokers must take the same measures following receipt of amendment

or cancellation orders from the customer as he did with the original order, to ensure he has

proof of the instructions. Similarly, he should give the customer a confirmation of the new

instructions for future reference and in case of dispute at a later date. The relevant records

and books kept by the broker must also be changed accordingly.



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Duration of Orders

Hit, Take and Fill or Kill orders will be deleted from the system immediately, if they fail tobe executed. Other orders will be deleted from the system at the end of the trading day. All

limit and other special fill orders are therefore all good for the day orders.

Investors may give brokers orders with a longer effective period. Brokers will need to re-

enter orders on each day that the customer order is current. However, brokers must notify his

customer and ask for new instructions if any price sensitive information is announced

concerning the company or the market conditions change significantly during the currency of

the order.

Trading Errors

When a trade is made, i.e. an order is executed by being matched with an equal and opposite

order in the system, the broker is notified immediately on his screen. There are also end-of-

day trading reports provided to him from the system, which can be printed.

After a trade has been executed, the broker may discover that the wrong customer account

number has been entered. In this case, the broker must bring all related paperwork to the

ADSM to request that the accounts be amended.

On very rare occasions the ADSM may agree, at its absolute discretion, to cancel a trade that

has been executed. This will only be done with the agreement of both parties to the trade. Inthis case, a letter signed by the party requesting cancellation needs to be submitted to the

ADSM giving full details of the trades and the reason for requesting cancellation. The ADSM

will consult the counterparty before cancelling the trade.

Trading ex-benefit

When a company pays a dividend or makes a stock distribution e.g. by making a bonus issue,

then the ADSM will mark the securities ex-benefit on the trading day before the record

date. Any orders that are executed on that day are entered on the understanding that the buyer

will not get the dividend or receive the additional shares. Brokers must ensure that their

customers understand the implication of trading ex-benefit. Where a broker has orders witha long duration then he must check with his customer whether or not his customer wishes to

change the order price as a result of the ex-date being reached.

Suspension of Trading

The ADSM has the power to; suspend trading in a particular security, all securities, by a

particular broker or a particular brokers representative, at any time, if it considers that it is in

the interest of the market to do so.



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Update of Accounts

The system will reject a sale order if the investor does not have sufficient stock in his accountwith the selling broker. Brokers must therefore ensure that stock is available to meet the sale.

Brokers can check that stock is available for selling by making a position enquiry through his

workstation.

The system maintains an account on behalf of the investor, which is under the control of the

broker. Stock in this account is available for selling. The account is updated as follows:

stock is added to the account as a result of:

- a purchase on the market;

- transfer of stock, which has previously been lodged, to the account (though acustomer transfer to a broker or a transfer from another broker);

- stock benefits or events such as a bonus issue;

stock is frozen in the account as a result of:

- sell orders being entered (stock is earmarked to satisfy the order when it is

executed);

- pledge or freeze instructions relating to the stock being entered by the broker

or ADSM;

frozen stock is released as a result of:

- sell orders being cancelled (either by the broker or automatically at the end of

the day;

- pledge or freeze instructions being released by the broker or ADSM;

stock is debited from the account as a result of:

- executed sell orders;

- transfer of stock out of the account (through a customer transfer out of theaccount or to another broker);

- stock events that involve a change in the underlying security e.g. a

consolidation in this case stock will be debited under one security code and

credited under the new code).

The registered holding of the investor is updated at the end of processing on T+1.

Trading Limit



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In order to ensure that brokers will be able to meet their financial commitments to the market,

the ADSM will set a trading limit for each broker. The trading limit will be calculated as

follows:

amount of broker overdraft facility with the settlement bank (this is likely to be 80%

of the amount of the bank guarantee (the Law requires brokers to have a minimum

bank guarantee of DHS 10 million; however this may be increased at the discretion of

the broker);

plus any cash lodged with the ADSM (this may be cash belonging to the broker or

cash belonging to a specific customer (see below);

minus the net cash amount due to the ADSM on that day (i.e. any balance to pay in

respect of yesterdays trades (this is because cash settlement is not complete until theend of T+1)

plus or minus trades executed today.

Example

On day 1 a trader starts with a limit of Dhs 9 million. On that day he buys and sells with a net

value of Dhs 2 million to pay. His net balance at the start of the next business day will

therefore be Dhs 7 million.

During the morning of the next day he sells securities with a value of Dhs 5 million. At that

point his trading limit will be Dhs12 million.

Assuming he does no further trades and pays his net settlement amount his limit the

following morning will be Dhs 9 million.

If a broker has failed to pay any amounts due to the ADSM, then the ADSM may further

reduce the trading limit by a prudential amount, which in the opinion of ADSM will be

sufficient to cover any fees or penalties that may be payable for this breach of the rules.

When a trader is approaching the firms limit he will be alerted by a system warning.

Attempting to continue to input purchase orders will result in the trades being blocked by the

system, although sales may continue to be made. Brokers are able to view their trading limitson the ADSM's Equator system.

Brokers may raise their guarantee in one of two ways:

by providing an increased bank guarantee; or

by depositing cash with ADSM.

ADSM will deposit any cash into an account with the settlement bank, in the name of the

broker. The account will be under the control of the ADSM but any interest earned on the

account will belong to the broker.



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In some cases a particular customer may wish to execute a large trade that would cause the

broker to exceed his guarantee. In these cases the broker may lodge cash with ADSM but

advise that this cash belongs to a specific investor. When the broker enters the order for theinvestor he must advise the market controller who will increase the limit to allow that specific

trade to execute.

Trading Reports

Brokers can download an end of day trading report relating to the trades executed during the

trading session. This will enable him to make any settlement arrangements he may need to

make in time for the following days settlement deadlines.



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Settlement

Settlement with the customer

Terms of settlement with the customer will be laid down in the customer agreement, but as a

general rule, proceeds of any sale should be delivered to the customer promptly, or entered

immediately into the customers account with the broker if he holds one.

Delivery of Stock

Delivery of stock takes place automatically by book-entry transfer on T+1.

Trades are settled on a trade for trade basis by debiting the stock account of the seller and

crediting the stock account of the buyer.

Cash Settlement with the ADSM

Brokers settle the cash value of trades net with the ADSM; that is, each day, every broking

firm will either pay a sum of money to the ADSM, or receive a sum from it, depending on

whether the firm has spent more in purchases than it has received in sales, or vice versa. The

amount to pay or receive will be shown on daily payment statements. This amount may

include any fees payable to the ADSM and the Authority.

Brokers download daily payment statements from the ADSM system. They give full details

of their settlements for the relevant day and the net amount owing to the ADSM or due to the

broker from the ADSM.

Settlement with the ADSM operates via one settlement bank the National Bank of Abu

Dhabi (NBAD). While brokers may operate as many accounts with other banks as they wish,

each broker must also maintain a settlement account at NBAD. The NBAD will provide an

overdraft facility for each settlement account. Brokers are responsible for paying, to NBAD,

all fees, charges and overdraft interest associated with the operation of the account.

The ADSM notifies the bank of the net cash settlement position for each broker on the

morning of settlement day. On the day of issue of the payment statement, the settlement bank

will debit the accounts of net payers by noon with the amount due from them and will then

credit the accounts of net receivers, before the close of the banking day, with the amount due

to them.

If the broker owes money to the ADSM, he must ensure that this sum is in his settlement

account by noon on the due day. If the ADSM owes money to the broker, that amount will be

deposited in the brokers settlement account at NBAD by the close of the banking business

day.



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Where the broker has lodged his own cash with ADSM he may instruct that this cash is

transferred to his settlement account to meet sums due for payment that day and ADSM willthen instruct NBAD to transfer funds. Where the broker has lodged customer cash and has

advised the market controller that orders have been entered and executed for which the cash

is earmarked, ADSM will automatically transfer funds from the customer account to the

brokers settlement account to meet payment on the relevant day.

Failure to Pay

Brokers settlement accounts are backed by a bank guarantee from their own banks. If there

are insufficient funds in a brokers settlement account the ADSM will automatically use the

overdraft facility to pay ADSM and thus enable ADSM to pay net receivers of funds. The

NBAD will immediately advise the ADSM. ADSM will immediately transfer any funds inthe brokers cash account to the settlement account and may immediately call on the bank

that issued the guarantee to provide funds to re-imburse the settlement bank. However in the

latter case ADSM may exercise its discretion although, under the rules, the ADSM must call

on the guarantee if the settlement account is not returned to credit within seven days.

At any time that a broker is in breach of the rules, in this case by failing to fund his settlement

account on the settlement due date, the ADSM may, at its discretion :

immediately suspend the broker;

impose a fine for breach of the rules; and/or

reduce the brokers trading limit by a prudential amount.



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Statements of AccountEvidence of ownership

The confirmation issued by the broker to the customer at the end of the trading day acts as the

customers notification that he has successfully sold or purchased the securities that he

wanted. Brokers who have control of customers stock are also required, under the rules, to

issue regular statements to the customer.

The customer will not, of course, receive a certificate for purchased securities as the

securities were bought on the market and settled by book entry transfer in the ADSM system.The ultimate proof that he does indeed own those securities is the entry of his name on the

company register kept by the ADSM. This entry is automatically made by the ADSM system

following settlement of the trade. However, investors may, if they wish, request a statement

of their holdings from ADSM at any time.

Broker to customer

The timing and frequency with which the broker issues statements of account to his

customers will be detailed in the customer agreement and may vary from broker to broker.

For example, some brokers may agree to send statements of both cash and stock aftersettlement of every trade, while others may decide to issue statements on a monthly basis.

However, it is strongly recommended and the sample customer agreement requires, that

statements should be sent out, as a minimum, every three months, even if no trading has

taken place, as this offers some measure of security to the investor.

A statement enables the customer to check that no unauthorised trading has occurred on his

account and it may also contain a reminder to customers to inform the broker of any change

in personal details. The Equator system will provide statements of stock, which the broker

can use when producing his own statements, or which he can send directly to the customer.

The ADSM systems do not have enough information to produce statements regardingcustomers cash accounts and the broker must produce these himself, if cash is held in a

segregated account on behalf of the customer.



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The ADSM to customer

If the customer wishes to have a statement direct from the ADSM, to confirm informationthey have received from their broker, they may request one either directly or through the

broker. If a customer asks his broker to obtain a statement for him, the broker must ask the

customer to complete and sign a Statement Request form (see Appendix A), which the broker

will then take to the ADSM in person. The ADSM will produce a statement as soon as

possible but at the latest by the end of the business day following receipt of the request. The

statement will be passed back to the broker if he requested the issue.

Composite statements

From time to time an investor may decide he would like a statement of all his holdings in allsecurities, regardless of which broker he dealt through. Provided the investor has been careful

to ensure that all his holdings have been included in his single IN identification records, the

ADSM will be able to produce such a statement for him. He may request this directly, by

going to the ADSM in person, or via one of his brokers.

If a customer asks his broker to obtain a composite statement for him, the broker must ask the

customer to complete and sign a Statement Request form (see Appendix A), which the broker

will then take to the ADSM. A composite statement will be produced by the next morning at

the latestand will be posted to the investors home address, or given to him in person, if he

requested it personally. If the broker submitted the request, the statement will be given or sent

to him to pass on to his customer.



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Off-Market TransfersPermitted Off-Market Transfers

Once the ADSM commences operations, all trading in securities listed on the ADSM must be

carried out on the ADSM trading floor. All off-market trading in these securities will be

prohibited. Therefore, all transfers as a result of trading will be carried out automatically by

the ADSM systems. However, there will still be some permitted transfers that are not the

result of trades, such as gifts, bequests and court orders. Where they are acting for an investor

that wishes to make an off-market transfer, brokers must satisfy themselves that these

transfers are truly what they purport to be, and are not an attempt to carry out off-market

trading.

Where an investor wishes to transfer stock that is in a trading account, he may either

approach the ADSM directly or go through the broker. In either case the investor must sign

an Off Market Transfer Request (Appendix A), which attests to the validity and legality of

the request. The beneficiary (or transferee) must have an IN before the request can be

actioned.

If the investor approaches the ADSM directly and the stock is in a trading account, the

ADSM will approach the broker to ensure that their is no valid objection to the movement.

The ADSM will then transfer the securities from the trading account of the broker to the newshareholder and will update the register accordingly.

Where a broker is acting on behalf of the recipient of an off-market transfer he will need to

obtain the customers signature on the Customer Transfer Request in order to move the

securities to his trading account in the recipients name.



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Benefits and Stock EventsCash Benefits

Cash dividends will continue to be paid directly to investors via the registrar.

Stock Benefits

In the case of stock benefits, stock will be added to the investors holdings via the system, as

this is where the records are held. The records will be adjusted centrally by the ADSM, andbrokers will be informed that changes have been made. They should then access the system,

download the new balances, and send statements to their customers informing them

accordingly.

Benefits with an Option to Choose

Where investors are given the option to choose whether they receive cash or stock, the

company will usually inform them directly and receive back their choices directly also. The

distributions will then be made as above.

It is possible, however, that companies may choose to ask the ADSM and its members to

carry out the process. In this case, brokers will be sent the option forms by the ADSM, and

will be asked to distribute them to their customers who own that particular stock. Customers

will be asked to return their forms to the brokers who will pass them back to the ADSM to

organise distribution.

Stock Events

The processing of stock events, e.g. subdivisions and consolidations will need to be agreed on

an individual basis with the ADSM. It may be necessary to suspend trading for a day to

ensure that all trades are settled before the effective date of the event.

On the effective date, the ADSM will automatically update the stock accounts of investors to

reflect the effect of the stock event. Trading may then commence in the shares in their new

form.



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Appendix A Forms

A1 IN Application form Private Individuals

A2 IN Application form Companies

A3 IN Application form Government

A4 Stock Lodgement form

A6 Customer Transfer To Broker form

A6 Customer Transfer From Broker form

A5 Certificate Required form

A6 Change Details form

A5 Statement Request form

A7 Off Market Transfer form



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Appendix B Code of Conduct and Customer Agreement

CODE OF CONDUCTABU DHABI SECURITIES MARKET

Introduction

This Code of Conduct represents an indication of the commitment required of ADSM Brokers and

Brokers Representatives to the highest standards of integrity, honesty, fairness, openness and

efficiency in the conduct of Brokerage Services and their business practices. It applies to ADSM

Brokers not with standing anything else contained in the Rules. It reflects the commitment to maintainstandards in the interests of the Market and so reduce the risks of customers in obtaining investment

advice and in the provision of Brokerage Services in a competitive market.

This Code is a statement of the required practice for ADSM Brokers and Brokers Representatives.

Any breach of its provisions will be viewed as serious by ADSM and the Authority and discipline

may ensue.

When the Abu Dhabi Securities Market makes enquiries in respect of ADSM Brokers, the ADSM will

refer to matters set out in this code, as well as to the rules and regulations of ADSM in considering

whether any person is or has been guilty of misconduct or is a fit and proper person to remain

licensed. The Code is a minimum standard with which ADSM Brokers must comply staff are

expected to exceed this standard wherever and whenever feasible.

This Code may be varied by the Board from time to time.

Interpretation

Terms in this Code shall have the same meaning as given to those terms in the Rules of the market

operated by ADSM.

Non Public Information means any information acquired by any means which relates to the value

of any security traded on the exchange, or which may be so in future, which is known to individuals

by virtue of their relationship with or to any such company and which has not been made public by an

official announcement.

Manipulative Trading Practices

Manipulative Trading Practices are prohibited. These include:

Creating or attempting to create a false or misleading appearance of active public trading for a

specific stock, for example fictitious orders for the same stock placed with different ADSM Brokerage

firms.

Publishing or spreading false data or information regarding the position of entities whose Securities

are listed on the market or regarding other ADSM Brokers.



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[Brokers Regulation 18(7)].

Entering or attempting to enter into any scheme or arrangement to sell and re-purchase a stock in an

effort to manipulate the market.

Causing the last sales or last bid or offer to the day in a stock price to be higher or lower with the

intent to manipulate closing price quotations.

Using or attempting to use any information to influence the market prices of a stock .

Making a fictitious transaction in a stock involving no real change of the ownership of a stock.

Improper Selling Practice

Improper Selling Practices are prohibited. These include:

Confirming a transaction where no trade has been executed (Bucketing).

High pressure selling or other undesirable sales practice or other selling of a nature considered

undesirable.

Leading a customer to believe that he can suffer no loss through opening an account or trading in any

stock.

Confidentiality of Customer Information

All information concerning a customers transaction and his account must be considered confidential

and must not be disclosed except with customers permission or by order of ADSM.

Information regarding a customers activity and orders must be kept confidential and not to be used

for the benefit of other customers. [Brokers Regulation 18(6)].

Honesty and the Customers Best Interest

[Brokers Regulation 18(10)].

ADSM Brokers are required to maintain the highest standards of integrity, honesty, fairness,

openness, efficiency, justice and equity at all times in their dealings. ADSM Brokers are required to

act at all times in the customers best interest.

All recommendations must be based on a careful analysis of both the customer information obtainedfrom the customer and the information related to the particular transaction.

A cautionary advice must be given to a customer giving orders which appear unsuitable in the light of

information available to the ADSM Broker. The advice given, and the customers response, is to be

recorded in writing.

The customers assets are the property of the customer and are to be used only for the customers

purposes; the ADSM Broker is prohibited from using customers assets to his own advantage or for

the advantage of others.



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Clients money must be kept in a separate account from ADSM Brokers money.

All reasonable steps should be taken to ensure that all information given to the customer regarding his

existing portfolio is complete and accurate.

All appropriate business like effort must be made to learn the current financial and personal

circumstances and investment objective of each customer.

No assurance is to be given to a customer regarding the prospect for future price movement or

dividend payment of a security.

No undertaking and no form of warranty or guarantee may be given to re-purchase or secure the sale

of a security at a stated price.

Recommendations concerning investment or trading in securities must be made on the basis of

information which can be substantiated and is relevant.

When implementing clients instructions take into account the details of such instructions and

implement the instructions in accordance with the Rules

[ADSM Law 28(2)].

Conduct in Accordance with Authority Law

If an ADSM Broker acquires non-public information, he shall neither communicate the information,

nor take investment action on the basis of such information.

[Article 39(1) Authority Law].

The ADSM Broker or a Brokers Representative shall not knowingly participate in, nor assist in, any

act of violation of the securities laws of the UAE, Abu Dhabi or any other jurisdiction, nor the rules

and regulations of the Abu Dhabi Securities Market.

Risk Disclosure

An ADSM Broker shall not accept any instructions from a customer until the customer has completed

a Customer Agreement.

A Customer Agreement shall include an applicable Risk Disclosure Statement in the following form

(and shall be printed at least as large as other text in the customer agreement) as follows:

Risk Disclosure Statement

The price of securities can and does fluctuate, and any individual security may experience upward and

downward movements, and may even become valueless. There is an inherent risk that losses may be

incurred rather than profit as a result of buying and selling securities. Securities purchased may

become unsellable. Investments should only be made in the light of careful analysis and only to the

extent an investor can reasonably afford. The customer of a ADSM Broker must assure himself of his

ADSM Brokers honesty and competence otherwise the customer risk his investments being made

inappropriately or even that they may be misappropriated.



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Standard of duty to get the best available price

The ADSM Broker in its relations with its customers and in the execution of the mandate received

from the customer, is required to use the care that might reasonably be expected of an informedprofessional placed in the same circumstances to see the customers orders are executed at the best

price available on the Market, unless the customer has instructed otherwise.

Types of Buy and Sell Orders

The ADSM Broker must ensure that the customer understands what is involved in each type of

trading order entered for him. This includes descriptions of several types of trading orders which are

detailed in the System Manual along with minimum quotation spreads, and the commissions

applicable.

Professional Knowledge

A continuous effort must be made to maintain a high standard of professional knowledge in managing

the ADSM Broker, both financially and operationally and to ensure that the ADSM Broker has in

place procedures for proper conduct of his business.

Maintain Proper Records

It is the ADSM Brokers responsibility to maintain up-to-date records. It is recommended that three

types of records be maintained by the ADSM Brokers .

New Customer Agreement Form: A copy of an appropriate Customer Agreement Form is attached;

an ADSM Broker shall use this or a version of this modified to suit his corporate policies but not

excluding any of the content of this form. A copy of a completed form is required to be maintained bythe ADSM Broker for each customer and it must be periodically updated with new information about

the customer. If such new information amounts to a material change, the ADSM Broker must ensure

that a new form is completed. Some examples of material changes in a customers affairs include (1)

Changes in marital status (2) change relating to a second person who is allow to place orders (3)

change in account name (4) becoming an insider in relation to a publicly traded company (5) a major

change in customers net worth or annual income

Portfolio Record: This document shows each customers holdings for the ADSM Brokers reference.

It must be maintained to ensure that all information within it is current since the record allows the

ADSM Broker to discuss at any time the customers security position or investment objectives. A

brief note of any special circumstances connected with any trade should be included.

Security Cross Reference: This record consists of an alphabetical listing of securities held by

customers. Listed under each security are the names of all customers who hold it. This data

provides the ADSM Broker with an accurate list of customers to be called should something

important develop that might affect that specific security.



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APPENDIX 1 TO CODE OF CONDUCT

[ADSM BROKER]

CUSTOMER AGREEMENT

ADSM Broker Details

Name

Address

FaxE-mail

Telephone

Contact Details

(including e-mail)

Account Number

Customer Details

Name

Address

Fax

E-mail

Telephone

Investor Number

(First named holder on account)

Citizenship

Passport Number

Bank Account Details

(Bank name, branch and account

number)

Account Details

Type of Account PERSONAL/PARTNERSHIP/CORPORATE



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(Attach details of joint account

holders)

Does anyone other than the personsnamed have any authority over or any

financial interest in the account?

YES/NO

Provide details

Is this a discretionary account? YES/NO

See attached authority

Special Instructions

Type of account CASH ACCOUNT/CREDIT ACCOUNT

Delivery of Securities Securities will be held in an account within ADSM unless specificwithdrawal or transfer instructions are received

Method of Confirmation

Language Preferred ARABIC/ENGLISH

Personal Information

Business Name

Occupation

Relationship to the Business OWNER/PART OWNER/EMPLOYEE/OTHER (Please specify)

Are you a senior officer or director of

a company whose shares are traded on

ADSM?

YES/NO

(Details)

Do you or does any part of your

business have a position of control in

such a company?

YES/NO

(Details)

Age

Marital Status

Number of Children and Ages

Approximate Net Worth

Annual Income

Investment Knowledge



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Investment Objectives

Level of Risk

We hereby agree that the Investor appoints the ADSM Broker, and the ADSM Broker accepts such

appointment, to perform certain Brokerage Services upon the terms and conditions attached as

Schedule 1.

_____________________________ ____________________________

For and on Behalf of ADSM Broker For and on Behalf of Investor

_____________________________ _____________________________

Date Date

Definitions

In this Agreement, unless the context otherwise requires:

ADSM means Abu Dhabi Securities Market

Authority means the Securities and Commodities Authority, established under the Authority Law.

Authority Law means Federal Law No 4 of 2000 relating to the UAE Securities and Commodities

Exchange and Authority.

ADSM Broker means the person whose name and details are set out on the cover page.

Central Bank means the Central Bank of the United Arab Emirates.

Customer means the person whose name, details and Investor Number are set out on the front page

of this Agreement.

Investor Number means the unique identification number allocated to the Customer by ADSM

which is a condition to trading of Securities by the Customer.

Market means the market for buying and selling securities operated by ADSM.

Rules mean the rules of the market operated by ADSM as prescribed by ADSM from time to time.

Securities means shares, bonds and financial notes approved by the Authority and listed and traded

on the Market.

System means the computerised trading system for the Market utilised by ADSM.

Trading Account means the Securities trading account within the System held with the ADSM

Broker.



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Unless otherwise stated, the following apply:

A person may, depending upon the context, include an individual, any form of corporate or business

association in any state or form of governmental or official body, whether having a distinct legalentity or not.

The clause headings and subheadings are used in this Agreement only to make it easier to read. They

are not intended to affect its meaning.

The schedules and cover page shall form part of this Agreement.

Single shall include plural and vice versa.

References to the masculine shall include where appropriate references to the feminine and vice versa.

References to any statute, regulation or statutory instrument shall be deemed to be references to thatstatute, regulation or statutory instrument as from time to time amended or re-enacted or as the

context permits substituted therefor from time to time.

The words written or in writing include facsimile reproductions or any other means of

communication resulting in permanent visible reproduction.

Unless stated otherwise references to monetary amounts are to United Arab Emirate currency.

ADSM Broker Warranties

The ADSM Broker warrants to the Customer that:

It holds the following valid and subsisting licences and registrations;

Brokers Access Licence issued by ADSM under the Rules;

Registration in the Register of Brokers maintained by ADSM;

Broking Licence issued by the Authority under the Authority Law and Regulations passed pursuant to

that Law;

Registration in the Register of Brokers maintained by the Authority under the Authority Law and the

Regulations passed under that Law; and

Broking licence issued by the Central Bank,

and the ADSM Broker is in full compliance with the terms of the above.

Customers Rights and Obligations

The Customer warrants that it holds a valid Investor Number as set out on the front page of this

Agreement. The ADSM Broker is entitled to treat as genuine and duly authorised all dealing

instructions which he reasonably believes come from the Customer and which are consistent with the

instructions set out on the front page.



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The Customer shall deliver to the ADSM Broker a duly signed a power of attorney or powers of

attorney in the form prescribed by ADSM from time to time in favour of ADSM or such other persons

as ADSM may prescribe from time to time under which it authorises such persons to execute share

transfer forms on its behalf.

The Customer acknowledges that until it has complied with clause 3.2, the ADSM Broker shall not

accept any orders or instructions from the Customer.

The Customer is responsible for immediately informing the ADSM Broker:

If he has not received confirmation by post that the ADSM Broker has received its dealing

instructions and/or carried them out within 48 hours of placing them;

If the Customer receives confirmation of a trade which it did not place or which took place other than

in accordance with his instruction.

Subject to Clause 14, the Customer shall issue instructions to the ADSM Broker by written

instruction, fax or e-mail or by oral instruction given by telephone or in person to or at the address or

number set out on the front page of this Agreement or such other address as the ADSM Broker shall

specify for the purpose by written notice to the Customer containing the information set out in

Schedule 2.

The Customer shall not request the ADSM Broker to sell any Securities on the Market unless those

Securities are lodged with the ADSM Broker in the Customers Trading Account in accordance with

the procedure specified by the ADSM Broker from time to time.

The Customer shall not issue any instruction to the ADSM Broker in respect of any Securities which

would if carried out or executed and settled be contrary to the provisions of the memorandum andarticles of the issuer of those Securities or the law. The Customer shall indemnify the ADSM Broker

in respect of any claims, damages or losses suffered by the ADSM Broker arising out of a breach of

the foregoing.

The Customer is not entitled to open more than one Trading Account with the ADSM Broker.

The Customer shall supply the ADSM Broker with all information which the ADSM Broker may

require in order to verify the identity of the Customer or the validity of its instruction.

The Customer is not entitled to receive the proceeds of any trade undertaken by the ADSM Broker on

its instructions until such trade has been executed and settled in the System.

The Customer authorises the ADSM Broker to disclose to the Authority any information concerning

the Customer and its transactions that the Authority may require.

If the Customer wishes to receive a share certificate in relation to any Securities lodged in its Trading

Account with the ADSM Broker, it shall follow the procedures prescribed by ADSM from time to

time including paying to the ADSM Broker such fees as may be prescribed by ADSM or the

Authority.

In the event that the Customer does not have the capacity to have Securities the subject of an executed

buy order registered in its name, the Customer acknowledges that ADSM may sell such Securities on



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behalf of the customer and the Customer shall indemnify the ADSM Broker for any loss suffered by it

in respect of such sale.

The Customer acknowledges that once an order placed by the ADSM Broker on behalf of theCustomer is executed on the S

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