Annual Review

2020

A highlight of the year was the launch of the Nasdaq Dubai Growth Market for small and medium-sized enterprises (SMEs) by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai. This landmark initiative will transform the prospects of many businesses in the UAE and around the world, by offering a new route to raise capital for expansion.

Performance Highlights

January
  • Exchange is founder signatory of UAE’s Guiding Principles on Sustainable Finance
February
  • Listing of USD 300 million Sukuk by GFH Financial Group  
  • Listing of USD 400 million Sukuk by Dar Al-Arkan  
  • Listing of USD 2 billion Sukuk by Islamic Development Bank  
  • Listing of USD 500 million bond by Emirates NBD
March
  • Manrre Logistics Fund joins Nasdaq Dubai Private Market
  • Al Ramz expands market making activity on Nasdaq Dubai equity futures
  • Listing of USD 200 million Sukuk by Emirate of Sharjah
JUNE
  • Listing of USD 200 million Sukuk by GFH Financial Group  
  • Listing of USD 1.5 billion Sukuk for COVID 19 support by Islamic Development Bank  
  • Listing of USD 1 billion Sukuk by Dubai Islamic Bank  
  • Listing of USD 500 million Sukuk by Sharjah Islamic Bank  
  • Listing of USD 300 million Sukuk by Dubai Islamic Bank  
  • Listing of USD 1 billion Sukuk by Emirate of Sharjah
  • Listings of three Sukuk with total value of USD 2.5 billion by Indonesian government
  • Al Dar Shares & Bonds becomes derivatives Member of Nasdaq Dubai
July
  • Listing of USD 750 million bond by Emirates NBD
  • Listing of USD 1.5 billion Sukuk by DP World
  • Listing of USD 1 billion bond by Emirate of Sharjah
AUGUST
  • Nasdaq Dubai signs agreement with Zhongtai Financial International and Beijing Tian Tai law firm to attract Chinese listings to Dubai
  • Listings of two green bonds with total value of USD 1.2 billion by China Construction Bank
  • Collaboration announced with Aurora50 to enhance gender diversity on UAE Boards
September
  • Listing of USD 500 million Sukuk by Emirates Islamic
October
  • The Crown Prince of Dubai, H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, launches the Nasdaq Dubai Growth Market for IPOs
  • Listing of USD 600 million Sukuk by the Islamic Corporation for the Development of the Private Sector
  • Listing of USD 600 million bond by Commercial Bank of Dubai
  • Listing of USD 600 million bond by the Investment Corporation of Dubai
November
  • Listing of USD 1 billion Sukuk by Dubai Islamic Bank
  • Listing of USD 250 million Sukuk by Emirate of Sharjah
  • Listing of USD 750 million Sukuk by Dubai Aerospace Enterprise
CAPITAL ADMITTED at year-end (USD BILLIONS)
No. of Listings

Equities Trading

Year Value (USD) Volume (shares) No. of trades
2020 1.566 billion 189 million 16,345
2019 1.613 billion 151 million 40,724
2018 1.153 billion  164 million  29,057
EQUITIES TRADED BY VALUE (USD MILLIONS)
No. of trades

FTSE Nasdaq Dubai UAE 20 Index

The index fell 3.9% over the year to 3,061.7 at the end of 2020 from 3,184.4 at the end of 2019. It tracks liquid stocks listed on UAE stock exchanges.

Members' Market Share by Value of Equities Traded, 2020

Most active 10 members by % traded value
Member % Traded Value
EFG-Hermes UAE  58.33
Arqaam Securities  33.87
BH Mubasher Financial Services  3.36
SICO Financial Brokerage  1.61
Al Ramz Capital 0.76
Emirates NBD Securities 0.57
FAB Securities  0.43
SHUAA Securities  0.31
Mashreq Securities  0.20
Al Ramz Capital (market maker)  0.17

EQUITY FUTURES TRADED CONTRACTS

Sukuk Listings

Issuer Month Value (USD)
GFH Financial Group February 300 million 
Dar Al-Arkan    February    400 million 
Islamic Development Bank February 2 billion
Emirate of Sharjah March 200 million
GFH Financial Group June    200 million
Islamic Development Bank    June    1.5 billion  
Dubai Islamic Bank June 1 billion
Sharjah Islamic Bank June 500 million 
Dubai Islamic Bank June 300 million
Emirate of Sharjah June 1 billion
Government of Indonesia June 1 billion
Government of Indonesia June 750 million
Government of Indonesia June 750 million
DP World July 1.5 billion
Emirates Islamic September 500 million
Islamic Corporation for the Development of the Private Sector October 600 million
Dubai Islamic Bank November 1 billion
Emirate of Sharjah November 250 million
Dubai Aerospace Enterprise November 750 million
Total USD 14.5 billion

Bond Listings

Issuer Month Value (USD)
Emirates NBD February 500 million 
Emirates NBD July 750 million 
Emirate of Sharjah July 1 billion  
China Construction Bank August 700 million   
China Construction Bank August 500 million  
Investment Corporation of Dubai October 600 million
Commercial Bank of Dubai October 600 million
Total USD 4.65 billion

Chairman's Message

ABDUL WAHED AL FAHIM
Chairman, Nasdaq Dubai

In a challenging year for the global economy the exchange demonstrated both resilience and dynamism in 2020. It achieved notable successes and prepared the ground for further growth. Business continuity was seamlessly achieved in the face of the pandemic, as the exchange’s robust infrastructure and efficient preparation ensured that trading and other business activities continued as usual on behalf of issuers, investors and market participants, while safeguarding employees and stakeholders. This enabled Nasdaq Dubai to maintain its focus on its commercial priorities, resulting in another year of strong development.

A particular highlight was the launch of the Growth Market for small and medium-sized enterprises (SMEs) by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai. This landmark initiative will transform the prospects of many companies in the UAE and around the world, by offering a new route to raise capital for expansion. The Growth Market will bring further investment and creative energy to Dubai, reinforcing Dubai's role as the region’s financial hub and adding further momentum to its economy.

Debt listings on the exchange again broke records in 2020. New Sukuk listings reached 14.5 billion US dollars and total new listed debt was valued at 19.15 billion US dollars, in both cases exceeding the previous highs achieved in 2019. This expansion strengthened the exchange’s established role as a listing venue for regional and international Islamic and other issuers that appreciate the global investor links, high visibility and excellent regulatory infrastructure that Nasdaq Dubai provides.

Nasdaq Dubai further developed its longstanding collaboration with Dubai Financial Market (DFM), our sister exchange under the Borse Dubai umbrella. We were delighted to provide our derivatives expertise and experience in support of DFM’s launch of equity futures. The appointment of Hamed Ali as Deputy Chief Executive Officer of DFM in July, as well as the alignment of the exchanges’ Business Development and other teams announced in December, have further invigorated the cooperation between Nasdaq Dubai and DFM as they spearhead Dubai’s capital markets expansion and innovation.

Business Review

HAMED ALI
Chief Executive Officer, Nasdaq Dubai and
Deputy Chief Executive Officer, DFM
Equities

In Dubai as in the rest of the world, SMEs and young businesses often face hurdles when they seek investment for expansion. Nasdaq Dubai took a major step towards meeting their needs with the launch of its Growth Market for IPOs in October 2020. The market will enable international and regional investors to access many attractive investment opportunities through public offerings and secondary trading on the exchange.

Announcing the Growth Market, His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai, commented that it will add further momentum to Dubai and the UAE’s established role as the Middle East’s hub for business and will serve as an ideal incubator for innovative projects. The Growth Market falls under the framework of the Dubai Future District initiatives, which are creating the economy of the future by providing an ideal environment for enterprises to succeed.

His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, said: “SMEs are a key engine of our national economy. The launch of the Nasdaq Dubai Growth Market is a strategic step that will support this vital sector by opening new horizons for its companies and providing them with investment resources to expand their business and enhance their attractiveness in global markets."

Before and after the launch of the Growth Market, leading government bodies, UAE free zones and expert advisory companies took part in ongoing collaboration with Nasdaq Dubai designed to bring listings to the Growth Market. In response to high demand from potential issuers and other market participants, the exchange conducted a programme of webinars to publicise the features and advantages of the new market jointly with a number of advisors including Al Tamimi, Crowe UAE and Safa Capital. Together with DFM and Dubai Airport Free Zone, the exchange held a webinar for potential issuers about the advantages offered by both sister exchanges.

A webinar conducted by the exchange jointly with DIFC discussed the Growth Market as part of Dubai’s offering to Chinese businesses. The exchange gave further webinars specifically for potential Chinese issuers that wish to either enter the region for the first time or expand their existing business activities here. In addition, Nasdaq Dubai signed a strategic cooperation agreement with Hong Kong-based Zhongtai Financial International and Beijing Tian Tai Law Firm Shanghai Branch, in order to support Chinese companies that wish to list on the Middle East’s international financial exchange.

This active outreach contributed to the significant volume of enquiries that we received about the Growth Market from potential issuers, including from our own region and China. A number have appointed advisors and expressed interest in listing in the first half of 2021.

Companies based anywhere in the world can list on the Growth Market and benefit from Nasdaq Dubai’s international investor links as well as the global visibility that a listing on the exchange provides. Fast growing businesses will be able to achieve a streamlined and cost-effective listing on the region’s international exchange. In line with the Dubai Financial Services Authority’s helpful introduction of a listing framework tailored for SMEs announced in April, the Growth Market allows companies to list if they are valued below 250 million US dollars. A minimum operating history of just one year is required, compared to three years for Nasdaq Dubai’s main market. Issuers on the Growth Market will appoint a Listing Advisor, such as a financial advisory firm, investment bank or law or accounting firm, with appropriate expertise to provide support and guidance before and after IPO.

In March the exchange expanded its support for the REIT sector by welcoming Manrre Logistics Fund, a prominent Dubai-based real estate fund, to the Private Market segment of the Growth Market. Launched by Palmon Group, Manrre is managed by Dalma Capital and focuses on institutional-grade logistics and industrial properties.

Manohar Lahori, founder and chairman of Palmon Group, said: “Placing the shares with Nasdaq Dubai’s depository strengthens Manrre’s relationship with investors, demonstrating our ongoing commitment to transparency, governance and safe keeping. The exchange provides a well regulated environment with global visibility.”

By joining the Private Market, Manrre deposited its shares for safekeeping in Nasdaq Dubai’s Central Securities Depository (CSD). This moved the company into an exchange environment ahead of any potential capital raise. The CSD also facilitates share transfers between investors.

Total equities traded value on Nasdaq Dubai reached 1.566 billion US dollars in 2020, a 2.96% decline from 1.613 billion US dollars in 2019. Volume reached 189 million shares, up 25.17% from 151 million shares in 2019. The most active equities broker on the exchange by traded value during the year was EFG-Hermes, followed by Arqaam Securities and then BH Mubasher Financial Services. Sico Financial Brokerage and then Al Ramz Capital were fourth and fifth most active.

The FTSE Nasdaq Dubai UAE 20 index, which tracks liquid stocks listed on UAE exchanges, ended the year at 3,061.7, down 3.9% from 3,184.4 at the end of 2019.

SUKUK and BONDS

Amid market volatility in 2020, Nasdaq Dubai again demonstrated its value as a trusted and secure listing venue for regional and international issuers. Benefiting from growing investor appetite as the year progressed, new Sukuk listings reached an annual record high of 14.5 billion US dollars during the year, 2.5% higher than the 14.15 billion US dollars of Sukuk that listed in 2019, which was itself a record high. The issuances came from companies making their debut listing on the exchange as well as from entities that were already established issuers on Nasdaq Dubai.

Including conventional bond listings of 4.65 billion of US dollars, total new debt listings in 2020 also reached a new annual record of 19.15 billion US dollars, up 8% from the previous record of 17.7 billion US dollars in 2019.

The first Sukuk listing of the year was a 300 million US dollar instrument issued in February by Bahrain-based GFH Financial Group, its inaugural listing on the exchange.

Jassim Alseddiqi, Chairman of GFH Financial Group, said: “Listing our Sukuk on a well-regulated and international trading platform like Nasdaq Dubai will expand GFH’s reach and visibility among the global and regional investor community. The overwhelming response received on our Sukuk issuance demonstrates the strong confidence investors have in GFH.”

This was followed by a 400 million US dollar Sukuk listing in the same month by Dar Al-Arkan of Saudi Arabia, its fourth Sukuk listing on the exchange since 2017. Also in February the Islamic Development Bank (IsDB) listed a two billion US dollar Sukuk, bringing its total number of Sukuk listings on the exchange to 12. In March the Emirate of Sharjah listed a 200 million US dollar Sukuk.

June was a particularly active month beginning with another Sukuk from GFH Financial Group, for 200 million US dollars. The IsDB listed its second Sukuk of the year at 1.5 billion US dollars, with the funds earmarked for COVID-19 relief efforts including medical, social and business initiatives. Dubai Islamic Bank (DIB) listed a Sukuk in June of one billion US dollars followed the same month by a tap issuance of 300 million US dollars. The bank said the capital raised would support customers and businesses through a difficult economic period. Sharjah Islamic Bank listed a 500 million US dollar Sukuk in June followed by the Emirate of Sharjah’s second Sukuk listing of the year, of one billion US dollars.

The final three Sukuk listings in June were all from the government of Indonesia. One was for one billion dollars and two for 750 million US dollars each, with one of the latter dedicated to funding sustainable development projects. The Indonesian government is the largest Sukuk issuer on Nasdaq Dubai by both value and number of listings, with securities totalling 17.5 billion US dollars from 14 issuances.

DP World listed a 1.5 billion US dollar Sukuk in July, bringing its Sukuk and conventional bond total on the exchange to 10.09 billion US dollars. This makes it the largest UAE-based debt issuer on Nasdaq Dubai.

Sultan Ahmed Bin Sulayem, Group Chairman and CEO of DP World, said: “We are delighted to further strengthen our debt listings relationship with Nasdaq Dubai as the region’s international exchange, which provides our issuances with excellent global visibility and close links to investors around the world.”

Emirates Islamic’s listing of a 500 million US dollar Sukuk in September was followed by the October listing of a 600 million US dollar instrument by the Islamic Corporation for the Development of the Private Sector, the private sector arm of the Islamic Development Bank. DIB listed another one billion US dollar Sukuk in November and the same month the Emirate of Sharjah listed a 250 billion US dollar Sukuk. The final Sukuk listing of 2020, also in November, was of the inaugural 750 million US dollar Sukuk issuance by Dubai Aerospace Enterprise, strengthening the exchange’s longstanding support for the UAE’s aviation sector.

H.E. Essa Kazim, Governor of Dubai International Financial Centre, Secretary General of Dubai Islamic Economy Development Centre, and Chairman of Dubai Financial Market, said: “Emirates Islamic’s latest successful issuance and listing underline both the success of the Sukuk sector and the resilient economic performance achieved by the UAE and Dubai in addressing the global challenges that 2020 has brought. Dubai will further expand its leadership role in Sukuk."

At the end of 2020 Dubai’s Sukuk listings totaled 76.04 billion US dollars, its highest ever amount, underlining the emirate’s growth as one of the world’s largest venues for listed Sukuk by value.

The first two conventional bond listings of the year came from Emirates NBD, with instruments of 500 million and 750 million US dollars in February and July respectively. Emirates NBD is the largest financial services bond issuer on the exchange, now with five listings valued at 3.6 billion US dollars. Later in July the Emirate of Sharjah listed a one billion US dollar bond. In August China Construction Bank listed two green bonds of 500 million and 700 million US dollars. The issuances received pre-issuance certification as climate bonds from the Climate Bonds Initiative under the Climate Bonds Standard. The bonds raised the exchange’s ESG debt listings to a total value of 7.75 billion US dollars from nine listings, making Nasdaq Dubai a regional leader in the ESG sector. Nasdaq Dubai has now listed 19 debt issuances from Chinese entities with a total value of 11.3 billion US dollars.

His Excellency Li Xuhang, Consul General of the People’s Republic of China in Dubai, said: “With the deepening of the strategic partnership between China and the UAE, cooperation in all areas has been effectively consolidated and enhanced. The listing of CCB’s green bonds on Nasdaq Dubai is in line with the UAE's vision of supporting a green economy."

Investment Corporation of Dubai listed a 600 million US dollar bond in October. In the same month Commercial Bank of Dubai also listed a 600 million US dollar bond, it's inaugural listing on the exchange.

Many of the debt listings during the year were marked by market-opening bell ceremonies. Regular attendees included His Excellency Essa Kazim, Governor of Dubai International Financial Centre, Secretary General of Dubai Islamic Economy Development Centre , Chairman of Borse Dubai and DFM, and a Board Director of Nasdaq Dubai, as well as our Chairman Abdul Wahed Al Fahim together with senior executives from Nasdaq Dubai and DFM.

Equity Derivatives

Development of the exchange’s equity derivatives market during the year included the expansion of Al Ramz Capital’s role in March to include market making in all listed futures, providing significant support for liquidity. Al Ramz Capital has been a trading Member of the futures market since the platform launched in 2016. Al Dar Shares & Bonds joined the derivatives market as a trading Member in June, providing a new route for investors to access futures opportunities.

The exchange was delighted to support the DFM’s launch of an equity futures market in October. Drawing on its expertise and experience, Nasdaq Dubai has provided commercial and marketing knowhow to DFM’s futures offering, which initially consists of contracts on DFM-listed stocks. The DFM futures are cleared using Nasdaq Dubai operational and IT infrastructure.

Hamed Ali, CEO of Nasdaq Dubai and Deputy CEO of DFM said: “We have developed favorable trading rules for equity futures in line with best practices and in coordination with members and regulators, to ensure that the futures are well-positioned to resonate growth levels witnessed on international markets.”
Marketsite & Thought Leadership

Nasdaq Dubai strengthened its thought leadership role in diverse ways throughout the year. The MarketSite event space hosted numerous market-opening bell ceremonies by issuers on the exchange and other market participants, supporting their engagement with stakeholders and helping to publicise their activities in the regional and global media. As well as the Growth Market activities mentioned above, other leadership events held at MarketSite, or making use of its broadcasting facilities, included a discussion of capital raising opportunities for family businesses led by Al Tamimi; a look at the fixed income investment landscape by Franklin Templeton; insights into the financial implications of growing longevity by London Business School; a roundup of investment prospects in the healthcare and education Sector by Amanat Holdings; and an overview of the regional start-up ecosystem by DIFC FinTech Hive jointly with Nasdaq Dubai.

Abdulla Mohammed Al Awar, CEO of Dubai Islamic Economy Development Centre (DIEDC), said: “The development of the Islamic Economy is a pillar of strength as we look to the future, with growth and investment continuing despite the impact of the pandemic. The ethics and principles rooted in the Islamic Economy and highlighted in the SGIE report, provide a roadmap for governments and companies to develop the sector.”

For the second year running, MarketSite hosted the launch of the annual State of the Global Islamic Economy Report, authored by DinarStandard in partnership with Dubai Islamic Economy Development Centre (DIEDC). A bell-ringing by the newly established UAE Nation Brand Office celebrated the announcement that its logo and slogan “Make It Happen” appeared on the Nasdaq Tower screen in Times Square, New York City. MarketSite also hosted a stimulating capital markets session of the UAE Young Economist programme.

Nasdaq Dubai with other leading UAE entities launched a collaboration with Aurora50 to enhance female representation on Boards of Directors in the UAE.

As well as hosting CNBC International for another year in our television studio at MarketSite, we were delighted to welcome Arabian Radio Network’s Back to Business series of programmes which was broadcast from MarketSite.

Look Ahead

Building on the strong development across our asset classes that we achieved in 2020, together with the corporate structuring that has enhanced our collaboration with DFM, Nasdaq Dubai is positioned for further success in 2021. As the UAE and the world moves towards economic recovery, the exchange will expand its offering to issuers and investors alike, in our own region and internationally. At home, Expo 2020 will showcase Dubai to many overseas companies for the first time, including the capital markets possibilities that we can provide. Our international outreach will gather pace, with China and Africa among our major areas of activity.

CORPORATE GOVERNANCE

This section provides an overview of Nasdaq Dubai’s governance during the year 2020. 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 once in person in Dubai and on 3 occasions virtually. 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 make the board process efficient and has the benefit of considerable savings in resources, paper and printing.

The Nasdaq Dubai Board comprises 6 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, three 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 Committee meetings.

Board & Committee Meetings 2020

The Board held one in person and three virtual 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 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 2020 results, appointment of external auditors for year 2021, amendments to Anti Money Laundering Policy, Risk Register, Risk Policy, Risk Management Framework and Employee Policy, Data Protection Policy, Employee Communications and Disclosure Policy and Budget 2021.

Board AttendAnce
Member 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 4 of 4 4 of 4
Majid Saif Al Ghurair * 0 of 2
Rashid Al Shamsi 4 of 4 4 of 4
* Mr. Majid Al Ghurair retired by rotation in May 2020.

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 once in person in Dubai and virtually on 3 occasions. The Committee reviewed the annual budget, regular finance reports and the annual financial statements. The Committee recommended the annual budget, the annual financial statements and the external auditor for year 2021 to the Board for approval. The Committee met with the independent external auditors, KPMG, to consider the results of the annual audit and to review the annual financial statements for year 2019. The Committee reviewed the risk management reports from Market Operations and approved the Annual AML Return. The Internal Audit function, which is provided by Dubai Financial Market, met regularly with the Committee which received the Annual Internal Audit Plan for year 2021, progress on Internal Audit together with the Internal Audit reports following the completion of each audit. The Committee reviewed and recommended the amendments to the Anti Money Laundering Policy, Risk Register, Risk Policy, Risk Management Framework and Data Protection Policy.

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 once in person in Dubai and virtually on 3 occasions. The Committee met on each occasion with Compliance 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 Practitioner Committee Charters, extension of term of Practitioner Committee members and appointment of new Practitioner Committee members. The Committee reviewed the credit rating for debt portfolio and annual budget and resources for Compliance team.

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 once in person in Dubai and virtually on 3 occasions. The Committee reviewed and recommended for Board approval amendments to the Employee Policy and Employee Communications and Disclosure Policy. It reviewed Director Independence, the Human Capital annual budget and set the targets and objectives for the Chief Executive. The Committee received an internal audit report covering Human Capital and 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 significant risks that may face 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, Risk Management and 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.

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 the rating of following criteria; in addition to management request and required mandatory audits.

  • Criticality/Materiality;
  • Complexity;
  • Inherent risk;
  • Extent of change;
  • Time since last audit;
  • Fraud potential.

All key areas subject to high and medium risks such as compliance, financial, information technology and operations are included in the plan while the non-priority and low risk areas are excluded or to be considered later depending on circumstances. 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 as well resources dedicated for the audit. 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 relationships 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 that revolves around defining and identifying risks in each department, measuring, monitoring, managing and reporting significant risks to which Nasdaq Dubai may be exposed. Nasdaq Dubai has established a Risk Management Framework (RMF) to ensure that the exchange continues to be a stable, credible, and reliable organisation that manages all potential risks to its stakeholders. Nasdaq Dubai has a Risk Officer with overall responsibility for the risk management function in relation to financial services carried out by the exchange and for overseeing the implementation of the RMF. Head of Department 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 identifying, 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 with its 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.