Licensed Bodies & Capital
~55 min read
Lesson
Who needs an SCA licence
Anyone offering financial services 'inside the State' (the UAE) must be licensed by the SCA. The category of licence determines what activities the firm may do and how much capital it must hold.
Licence Categories
Definition · Five categories of SCA licence, each tied to a minimum paid-up capital.
Explanation
Categories run from full-scope dealing (Category 1) to advisory-only or arranging (Category 5). The higher the risk a firm can take, the higher the minimum capital required.
Why it matters
The exam loves matching the activity to the right category and capital number.
Real-world example
A boutique that only gives investment advice and arranges deals (no client money) typically falls in Category 5 with the lowest capital requirement.
Key exam points
- ●Category 5 = Advice & Arranging — lowest capital
- ●Higher categories = client money, dealing, custody = more capital
- ●Licences only apply to activity carried out INSIDE THE STATE
Common mistakes
- ●Forgetting that 'inside the State' triggers licensing — foreign-only activity does not
- ●Mixing up advisory (no client money) with dealing (client money handled)
Trigger
SCA licensing applies to financial services performed INSIDE THE STATE.
Exam Tip
If the question mentions 'advice / arranging only', think Category 5 and the lowest capital figure.
Review & Memorize
Quick facts
Exam Numbers
Licence Categories
5
Lowest-Capital Cat.
Cat 5
Advice / Arranging
What You Must Remember
Top exam facts
- ●5 licence categories tied to activities and capital
- ●Category 5 = lowest capital (Advice / Arranging)
- ●Licensing trigger = activity 'inside the State'
Key definitions
- ●Inside the State — Activity performed within the UAE
- ●Category 5 — Advice and Arranging only — no client money
Key numbers
- ●Categories: 5
Likely exam questions
- ●When is an SCA licence required?
- ●Which licence category has the lowest capital?
- ●What activities does Category 5 cover?