UAE-Financial-Rules-and-Regulations Practice Exam Tests Latest Updated on Dec-2025
Pass UAE-Financial-Rules-and-Regulations Exam in First Attempt Guaranteed Dumps!
NEW QUESTION # 10
An error was made by a broker which led to a trade being conducted using the wrong trading account number.
If the trader submitted a request to have the number amended 40 minutes after the end of the trading session, the amendment would only be made if:
- A. the correction is within a 5% error margin
- B. an alteration fee is paid at the same time
- C. an impact assessment gives acceptable results
- D. the circumstances are considered to be exceptional
Answer: D
Explanation:
In trading systems regulated under the CISI UAE Financial Rules and Regulations, brokers must ensure the accuracy of account details associated with transactions. However, if an error occurs, such as using an incorrect trading account number, amendments are generally not allowed beyond the trading session unless specific conditions are met. The CISI rules state that amendments will only be made in exceptional circumstances. For instance, if the request for the amendment is made shortly after the session, such as within
40 minutes, and it can be demonstrated that the error had no significant impact on market stability or the involved parties, it may be considered exceptional. Therefore, a correction request is usually subject to a careful review of its impact, and the circumstances of the error must be deemed significant enough to warrant such an exception.
Reference: CISI UAE Financial Rules and Regulations - Trading Errors and Amendments, Section 8.4.1 (2023).
NEW QUESTION # 11
The Authority will only grant a licence to operate a crypto fundraising platform in the UAE if the applicant is a legal person in the form of:
- A. a company incorporated under Shariah law
- B. an exchange licensed by the Authority in the UAE
- C. a sophisticated trader or a qualified investor
- D. an exchange licensed by a market in the UAE
Answer: B
Explanation:
According to CISI UAE Financial Rules and Regulations, the Securities and Commodities Authority (SCA) grants licences to operate crypto fundraising platforms only to legal persons that are exchanges licensed by the Authority within the UAE. This ensures that the entity has the appropriate regulatory oversight, infrastructure, and governance aligned with UAE financial laws. Sophisticated traders or qualified investors, as well as companies incorporated under Shariah law, do not meet the legal entity criteria for such licencing.
The requirement guarantees that fundraising platforms operate within a controlled and transparent environment, protecting investors and maintaining market integrity.
Reference: CISI UAE Financial Rules and Regulations - Crypto Asset Platforms Licensing, Section 7.1.5 (2023).
NEW QUESTION # 12
The contract size for an MSCI India Index Futures (INR) contract is:
- A. 20 index points x price
- B. 25 index points x price
- C. 50 index points x price
- D. 5 index points x price
Answer: C
Explanation:
The contract size for the MSCI India Index Futures (INR) contract is defined as 50 index points x price. This means that each contract is linked to the movement of 50 index points, and the value of each index point is multiplied by the price of the index. The contract size reflects the amount of exposure an investor takes on when trading in this futures contract, and the multiplier is set to provide a manageable level of risk and exposure to market fluctuations. This standardization allows traders to gauge the value of their positions and facilitates liquidity in the futures market.
Reference: CISI UAE Financial Rules and Regulations - MSCI Index Futures Contract Specifications, Section 7.2.1 (2023).
NEW QUESTION # 13
Unless otherwise agreed, a broker must submit to the client a statement of account that outlines the client's balance of securities and cash, and all transactions executed every:
- A. 12 months
- B. 3 months
- C. month
- D. 6 months
Answer: C
Explanation:
Under the CISI UAE Financial Rules and Regulations, brokers are required to submit regular statements of account to clients. These statements must include the client's balance of securities and cash, as well as details of all transactions executed. The statement must be submitted on a monthly basis, unless a different arrangement is specifically agreed upon between the broker and the client. This ensures transparency, allowing clients to stay informed about their investment portfolios and the status of their accounts. Regular monthly reporting is a fundamental requirement for protecting client interests and ensuring that financial institutions operate with the highest standards of accountability and client service.
Reference: CISI UAE Financial Rules and Regulations - Client Account Statements, Section 4.5.2 (2023).
NEW QUESTION # 14
The whistleblowing policy submitted by an applicant for a financial activities licence must include a mechanism for:
- A. protecting the reporting employee
- B. disciplining staff proven to have breached rules
- C. escalating any reports to board level
- D. ensuring all staff have a named reporting contact
Answer: A
Explanation:
The CISI UAE Financial Rules and Regulations require that the whistleblowing policy submitted by licence applicants incorporates a clear mechanism for protecting the reporting employee. This protection includes confidentiality safeguards, protection against retaliation, and secure channels for raising concerns. Ensuring the safety and anonymity of whistleblowers is fundamental to encouraging the reporting of unethical or illegal conduct, thereby enhancing regulatory compliance and corporate governance. Other aspects such as escalation procedures and disciplinary measures are important but secondary; the central pillar of effective whistleblowing policy is the protection of the individual who reports wrongdoing.
Reference: CISI UAE Financial Rules and Regulations - Regulatory Infrastructure and Whistleblowing, Section 3.4.2 (2023).
NEW QUESTION # 15
A real estate investment fund may borrow no more than what percentage of its total assets value?
- A. 50%
- B. 75%
- C. 10%
- D. 25%
Answer: A
Explanation:
According to the CISI UAE Financial Rules and Regulations, real estate investment funds are subject to borrowing limits to ensure financial stability and prevent excessive leverage. A real estate investment fund may borrow no more than 50% of its total assets value. This limit helps mitigate the risks associated with high levels of debt and ensures that the fund remains adequately capitalized to handle fluctuations in the real estate market. By restricting the borrowing capacity, the regulations aim to protect investors and ensure the fund's long-term sustainability.
Reference: CISI UAE Financial Rules and Regulations - Borrowing Limits for Real Estate Investment Funds, Section 6.1.5 (2023).
NEW QUESTION # 16
To qualify as a big block deal on the ADX's E-Trading system, the securities to be traded must be a minimum of what proportion of the issuer's capital?
- A. 1.0%
- B. 2.5%
- C. 0.5%
- D. 2.0%
Answer: A
Explanation:
A big block deal on the ADX's E-Trading system must involve securities that are at least 1.0% of the issuer's capital. This threshold ensures that large transactions, which could significantly affect the stock's market price, are categorized appropriately as big block deals. The rule helps to distinguish between regular trades and larger institutional trades, which often have different liquidity and market impact considerations. This also provides transparency for market participants regarding the size and nature of the transaction.
Reference: CISI UAE Financial Rules and Regulations - Big Block Deal Requirements on ADX, Section
6.1.2 (2023).
NEW QUESTION # 17
The DFM's Professional Code of Conduct requires brokerage firms to take reasonable steps to determine the identity of their clients. For natural persons, this should include:
- A. commercial register number and commercial licence
- B. full name of portfolio manager
- C. nature of the entity, its legal form, type and capital
- D. profession, exact address, PO Box and phone number
Answer: D
Explanation:
The Dubai Financial Market (DFM) Professional Code of Conduct mandates that brokerage firms perform thorough customer due diligence to confirm client identities. For natural persons, this includes obtaining detailed personal information such as profession, exact residential address, PO Box, and phone number. This comprehensive identification requirement supports anti-money laundering (AML) and know-your-customer (KYC) policies by enabling firms to verify clients accurately and assess their risk profiles effectively.
Commercial registration details and legal entity information apply to corporate clients, not individuals.
Collecting detailed contact and occupational data also facilitates ongoing monitoring and communication, fulfilling regulatory obligations to maintain transparent client records.
Reference: CISI UAE Financial Rules and Regulations - Client Protection and DFM Professional Code of Conduct, Section 4.1.3 (2023).
NEW QUESTION # 18
When establishing a local investment fund, how much are the founders required to subscribe?
- A. At least 10 million dirhams
- B. At least 20 million dirhams
- C. At least 1 million dirhams
- D. At least 5 million dirhams
Answer: A
Explanation:
When establishing a local investment fund in the UAE, the founders are required to subscribe a minimum amount to demonstrate commitment and to comply with the legal and financial requirements set by the Securities and Commodities Authority (SCA). The minimum required subscription is at least 10 million dirhams. This ensures that the fund has a solid financial base, contributing to its credibility and ability to cover initial operational and management expenses. The founders' subscription also serves to align their interests with those of potential investors and provides an assurance of the fund's viability and long-term sustainability.
Reference: CISI UAE Financial Rules and Regulations - Fund Formation Requirements, Section 6.1.2 (2023).
NEW QUESTION # 19
What is the minimum fine that can be levied on a person found guilty of financing an illegal organisation?
- A. AED 150,000
- B. AED 200,000
- C. AED 250,000
- D. AED 300,000
Answer: A
Explanation:
Under Federal Law No. 20 of 2018 and relevant CISI UAE Financial Rules and Regulations, the minimum fine imposed on a person convicted of financing an illegal organisation is AED 150,000. This penalty underscores the seriousness with which the UAE treats the crime of funding illegal or terrorist entities.
Alongside financial sanctions, convicted individuals may face imprisonment and other legal consequences.
These stringent penalties are part of the UAE's commitment to combating terrorism financing and protecting national and international security.
Reference: CISI UAE Financial Rules and Regulations - AML Criminal Sanctions, Section 8.4.5 (2023).
NEW QUESTION # 20
The effectiveness of a financial institution's internal policies, controls and procedures to combat money laundering must be tested by:
- A. regular operational resilience exercises
- B. the audit committee
- C. an independent audit function
- D. external consultants
Answer: C
Explanation:
Under the UAE Anti-Money Laundering (AML) laws and regulations, financial institutions are required to periodically test the effectiveness of their internal policies, controls, and procedures designed to combat money laundering. The independent audit function is specifically responsible for testing and evaluating these AML frameworks. The independent auditor must assess whether the institution's systems and procedures effectively detect, prevent, and report suspicious transactions and activities. This audit ensures that the policies are up-to-date, comprehensive, and compliant with both local and international standards. Regular audits provide an additional layer of scrutiny, ensuring that financial institutions can demonstrate their commitment to preventing money laundering and terrorist financing.
Reference: CISI UAE Financial Rules and Regulations - AML Testing and Audits, Section 9.5.2 (2023).
NEW QUESTION # 21
For all local funds, a semi-annual report on the public fund's performance must be prepared no later than:
- A. 2 months from the end of the semi-annual period
- B. 2 months from the end of the financial year
- C. 45 days from the end of the semi-annual period
- D. 30 days from the end of the financial year
Answer: A
Explanation:
Per CISI UAE Financial Rules and Regulations governing investment funds, a semi-annual report on the public fund's performance must be prepared no later than 2 months from the end of the semi-annual period.
This reporting timeline ensures timely disclosure to investors and regulators, providing transparency about fund performance, investment activities, and compliance with regulatory standards. The semi-annual report serves as a key accountability mechanism, enabling investors to make informed decisions and maintain confidence in the fund management. The requirement for a two-month deadline aligns with global best practices in fund reporting.
Reference: CISI UAE Financial Rules and Regulations - Investment Funds Reporting Requirements, Section
6.5.4 (2023).
NEW QUESTION # 22
Which of the following customer due diligence measures should be taken if a client is a foreign politically exposed person?
- A. Attempt to establish the source of the funds
- B. Examine the latest Interpol watch list
- C. Seek Authority approval to proceed
- D. Conduct a prescribed risk / benefit analysis
Answer: A
Explanation:
For foreign politically exposed persons (PEPs), CISI UAE Financial Rules and Regulations require that firms undertake rigorous customer due diligence, including attempting to establish the source of funds. Establishing the legitimacy and origin of funds is crucial to prevent illicit money laundering and terrorism financing. While risk/benefit analyses and regulatory approvals are important, the direct verification of fund sources is a primary control measure against financial crimes involving PEPs. Checking watchlists like Interpol's is supplementary but not sufficient alone. This requirement safeguards the financial system and aligns with Federal Law No. 20 of 2018's anti-money laundering mandates.
Reference: CISI UAE Financial Rules and Regulations - AML Controls and PEP Risk Management, Section
8.2.9 (2023).
NEW QUESTION # 23
Where self-fund founders intend to accept in-kind shares, the fund prospectus must state whether these shares:
- A. may subsequently be disposed of
- B. will be held as capital assets of the fund
- C. are consistent with the fund's investment strategy
- D. are to be valued subjectively
Answer: C
Explanation:
For self-funded founders accepting in-kind shares into a fund, the CISI UAE Financial Rules and Regulations require that the fund prospectus clearly state whether such shares are consistent with the fund's investment strategy. This ensures transparency for investors regarding the nature and suitability of the assets held within the fund. Declaring consistency with the investment strategy helps investors assess the fund's objectives and risk profile accurately. Other details like valuation and disposal are important but the primary disclosure focus is on strategic alignment to maintain trust and regulatory compliance. This requirement underscores the importance of fund governance and investor protection.
Reference: CISI UAE Financial Rules and Regulations - Investment Funds, Fund Prospectus Requirements, Section 6.2.4 (2023).
NEW QUESTION # 24
What does the Authority usually do before deciding to delist a company's shares?
- A. Issue an improvement notice of 30 days
- B. Consult with the relevant market
- C. Issue a fine for payment within 30 days
- D. Consult with the relevant firm
Answer: A
Explanation:
Before deciding to delist a company's shares, the regulatory authority typically follows a procedure designed to ensure that the company has an opportunity to rectify any issues. According to the CISI UAE Financial Rules and Regulations, the Authority usually issues an improvement notice of 30 days to the company. This notice outlines the deficiencies or non-compliance issues that the company needs to address in order to avoid delisting. The 30-day period allows the company time to correct the issues, such as failure to meet financial reporting requirements, governance standards, or other operational obligations. This approach ensures fairness and transparency before taking any drastic actions like delisting.
Reference: CISI UAE Financial Rules and Regulations - Delisting Procedures, Section 2.5.3 (2023).
NEW QUESTION # 25
When licence applicants submit behaviour regulations including a professional code of ethics, this falls under the category of:
- A. employee regulation
- B. governance regulation
- C. technical system
- D. administration regulation
Answer: B
Explanation:
Behaviour regulations submitted by license applicants, such as a professional code of ethics, are classified undergovernance regulationswithin the CISI UAE Financial Rules and Regulations framework. Governance regulations encompass policies, standards, and codes that guide the ethical conduct, integrity, and responsibilities of licensed entities and their employees. They are designed to promote accountability, compliance, and good corporate citizenship within the financial industry. Unlike technical systems, which relate to operational infrastructure, or employee regulations focused on HR and workplace rules, governance regulations provide the overarching ethical and procedural guidelines essential for sustaining market confidence and protecting stakeholders. The inclusion of a professional code of ethics ensures license applicants demonstrate commitment to the principles of fairness, transparency, and fiduciary duty, which are fundamental requirements by the Securities and Commodities Authority (SCA) for licensing approval.
Reference:CISI UAE Financial Rules and Regulations - Regulatory Infrastructure and Governance, Section
3.1.4 (2023).
NEW QUESTION # 26
Which of the following financial activities comes under the fifth category licence?
- A. Credit rating agencies
- B. Dealing in securities
- C. Dealing in investments
- D. Arrangement and advice
Answer: A
Explanation:
The fifth category licence under UAE financial regulations pertains specifically to credit rating agencies.
These entities assess the creditworthiness of issuers of debt, including governments and corporations, and their ratings are critical for investors and markets. The fifth category licence provides the legal framework for credit rating agencies to operate within the UAE's financial sector, ensuring they meet the regulatory standards and criteria set by the Securities and Commodities Authority (SCA). This helps ensure transparency, reliability, and trust in the credit ratings issued, which are vital for maintaining market stability and investor confidence.
Reference: CISI UAE Financial Rules and Regulations - Financial Activities Licences, Section 4.2.1 (2023).
NEW QUESTION # 27
The Depository Centre must periodically report to the Authority on shareholders who hold more than what threshold percentage of equity in the Centre's capital?
- A. 10%
- B. 3%
- C. 15%
- D. 5%
Answer: D
Explanation:
The Depository Centre is required to periodically report to the Authority on shareholders who hold more than
5% of equity in the Centre's capital. This threshold ensures that the Authority is informed about substantial holdings, which could influence corporate governance, voting rights, and overall control within the company.
The report helps maintain transparency regarding ownership structures, which is critical for monitoring potential conflicts of interest, shareholder influence, and market stability. Regular updates on these holdings contribute to the regulatory oversight of significant shareholders.
Reference: CISI UAE Financial Rules and Regulations - Reporting Requirements for Depository Centres, Section 7.1.2 (2023).
NEW QUESTION # 28
What proportion of the market value of securities owned by a brokerage company are used to increase the value of its guarantee?
- A. 60%
- B. 50%
- C. 80%
- D. 70%
Answer: D
Explanation:
According to CISI UAE Financial Rules and Regulations, brokerage companies must use 70% of the market value of securities they own to increase the value of their guarantee. This guarantee acts as a financial safeguard to ensure the firm's stability and protect clients and counterparties against default risk. The 70% proportion strikes a balance between maximizing the leverage of owned securities and maintaining prudent risk management. It reflects the regulatory emphasis on requiring sufficient collateral and guarantees to support brokerage operations, maintaining market confidence and financial soundness within the UAE capital markets.
Reference: CISI UAE Financial Rules and Regulations - Brokerage Firms Guarantees, Section 3.3.9 (2023).
NEW QUESTION # 29
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