Description of Company
The securities and Commodities Authority, popularly known as SCA, was established following a presidential decree on January 2000 with the mandate to monitor and supervise the securities market in the United Arab Emirates.
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The authority was granted legal, financial, and administrative independence to enable it discharges its duties without any direct influence from government authorities. SCA mission is to ensure that investors’ interests are protected by ensuring that fair practices are embraced in the securities market.
The authority has been working closely with the relevant stakeholders to ensure that United Arab Emirates capital market operates efficiently and that there is legal and investment awareness among all the relevant stakeholders.
It is mandated to identify and eliminate any attempts by the stakeholders to engage in unfair practices that may lead to financial loss of investors (Lager 78). Since its formation, this authority has executed its mandate in an exceptional manner, always trying to ensure that fairness and professionalism is maintained in the securities and commodities market.
Problem Statement and problem definition
The primary mission of Securities and Commodities Authority is to protect the interests of the investors and to promote principles of fair and sound practices within the United Arab Emirates’ capital markets. To achieve this mission, the authority has been given the mandate to develop policies and supervise their implementation within the country’s legal framework. According to Terterov, the emerging trends in the market, especially the issue of digitization of the financial market has been a big challenge for this firm (97).
Although the authority has done everything within its powers to digitize its system, it has been unable to manage the emerging trends brought about by the emerging technologies. Most of the security exchange authorities around the world, especially those in the developed nations, are already using digitized systems to regulate the capital market.
However, SCA has been slow in shifting to a completely digitized system, partly because of the limited budget it receives from the federal budget. It will be necessary to address this problem in order to ensure that this authority can achieve its mandate in the most efficient manner. The issue about budgeting should be addressed so that the management can set aside enough funds that will be needed to help in the transition to a fully digitized system.
Proposed Solution: Value Proposition
Securities and Commodities Authority has a very important mandate of monitoring and managing the United Arab Emirates’ capital market. It means that this authority is at the centre of the country’s economic growth.
The strategic role played by this body makes it very necessary to ensure that it operates efficiently not only to win the confidence of local and international investors, but also to ensure that unethical practices that may hurt the country’s economy is eliminated. In this section, the researcher will look at the process of identifying the problem, proposing an appropriate solution, and finding effective ways of implementing the proposed solution.
According to Kellan, the first stage of improving efficiency of any organization is to find the possible areas of weakness (32). Problem observation refers to the process of identifying what the problem is that hinder the ability of the organization to achieve the set goals in the best way possible. At SCA, it was observed that the system is slow in processing various activities.
Its accuracy was also compromised in some instances because of the overreliance on manual systems instead of having a digitized system. It was also evident that the authority has a large team of employees to undertake various tasks that can be simplified by the use of a digitized system. It was evident that the management had made some steps towards ensuring that its systems are automated. However, this was only at the initial stages of digitization because a number of tasks were still done manually.
According to Hassan and Mahlknecht, after observing the problem, the next step is to define it in very clear terms that can facilitate its solution (67). The problem that SCA is faced with is its inability to digitize its system. The firm is still using labor-extensive process in its major operational activities. This approach of operation is slowing its operations and reducing its efficiency. This impairs its ability to execute its mandate as the regulator of the securities market in the United Arab Emirates.
The management of this firm is aware of this issue and that is why attempts have been made to come out of this old system. However, it has been difficult to achieve success in the previous transition attempts. One of the issues that the management has raised is the limited budget that makes it almost impossible to undertake developmental projects. This has forced the management to continue using the labor-intensive strategy.
After identifying and defining a problem that is affecting efficiency of a firm, the next important stage is idea generation. This involves coming up with a possible solution that can be used to address the problem. In this context, the idea must successfully enable this firm to go digital in its operations.
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According to Vogel, many securities and commodities markets have embraced a digital approach in managing their operations (62). It is strongly suggested that this firm should embrace benchmarking as a way of solving this problem. This will involve identifying the best practices in similar firms, especially in the United States and parts of Europe. In benchmarking, Securities and Commodities Authority will try to align its operational strategies with that of other players which are more successful in their countries.
The next step will involve synthesis of the idea in order to find a way in which it can be implemented. Once the desired benchmarks have been identified, the management will need to find a way in which it can fit into the local context. The management will need to involve a team of experts to help in understanding of the new concept. The expert will explain the idea to the relevant stakeholders and why it can help in addressing the challenges that this firm is facing.
According to Kellan, when introducing new ideas, it is always common to find that most of the stakeholders do not understand it (71). For instance, if this organization picks on the best practices of similar firms in Europe, the relevant stakeholders will need to be informed about the intended change, how it will address the current problems, and ways through which it will be implemented without causing havoc in the normal operations of the organization.
At this stage, all the stakeholders get to ask relevant questions that will make them understand the new concept better. In this case, they will need to understand why Securities and Commodities Authority is emulating practices common in the New York or London.
When the new concept has been explained to the stakeholders, then idea evaluation will be the next important activity. Idea evaluation will involve assessing the practicality of the idea under the local environmental forces, and challenges that may be faced, including how such challenges will be managed.
The idea of benchmarking may be very appropriate in enabling this firm to go digital. However, care must be taken to ensure that the borrowed system of operation fits into the local context in the United Arab Emirates in the best way possible. It will be necessary to ensure that all the relevant stakeholders are comfortable with the new system and that it meets their expectations in the best way possible.
Sometimes it may be necessary to modify the borrowed system to make it work appropriately based on the local forces. The management of this authority will have to make wide consultations with the stakeholders during the evaluation process to ensure that all their concerns are put into consideration before the implementation stage.
The proposed solution, as discussed above, will be for this firm to emulate best practices of similar organizations that have been successful in other parts of the world. After the process of idea screening has been done successfully and all the stakeholders are convinced that the proposed solution will help solve the current problem, the next process will be implementation of the idea.
The management will have to undertake the challenging task of convincing the government to award it an extra budget that will specifically be used in implementing this project. If necessary, SCA may need to hire specialists to help in the transition process. The process of implementation should be gradual to ensure that everyone is brought on board without any serious disruptions of the organization’s activities.
Migration into a digital platform may be a simple process that may only need finances for the management of Securities and Commodities Authority to implement. However, the proposed solution goes beyond a simple move to the digital platform.
It focuses on the need for this firm to embrace best practices as it goes into the digital platform. It emphasizes on monitoring strategies employed by similar organizations in the developed countries and borrowing from them when developing local strategies. The following are some of the issues that will be emphasized when implementing the proposed solution for this firm.
Securities and commodities exchange has a mandate to protect interest of the investors from unscrupulous traders who may want to take advantage of them unfairly. Protection in this context means that they system must be watertight in terms of identifying malpractices in the securities market. The stakeholders will expect the system to offer them more protection than what is offered by the current system.
According to Hassan and Lewis, the New York Securities Exchange has the best case studies about unfair business practices that SCA should be able to detect after implementing the proposed solutions (45). The Lehman was once one of the best companies in the United States to work for and in terms of profitability.
The management strategies of the firm thrilled many investors who trusted it with their money. When this firm started experiencing challenges, the top managers manipulated figures that misled the investors. They did not realize that the value of their investment was depreciating at unprecedented rates. When the truth emerged, most of them had lost over 95% of their investments. SCA must use its new system to protect investors from such malpractices.
The new system promises to offer superior value to all the stakeholders who rely on its services in one way or the other. First, the use of technology promises to speed up operations of this authority. Services will be delivered within a shorter period compared to what is happening with the current system.
The new system also promises a greater efficiency in service delivery. The current system is too manual and this may compromise the quality delivered to various stakeholders. With the new system put in place, it will be possible to achieve maximum quality of services that are needed by various parties, including the government.
The new system also promises the stakeholders easy access to information. Migration into the digital platform means that all the relevant stakeholders will be able to access data they need digitally. The long tiring queues that have been common at the offices of this authority shall be eliminated. Instead, the stakeholders will be offered opportunity to get these services easily in an online platform. Cases of fraud will also be minimized as much as possible.
To achieve the intended success with the new system, it will be necessary for all the stakeholders to work as a team. Every team member has specific roles that they should undertake to achieve the intended success. The government, as the sole sponsor of this authority, has the responsibility of approving the new system and fully funding it.
The government stands to benefit if this new system becomes successful because cases of firms filing wrong returns to evade tax will be eliminated. Individual firms will need to participate in the evaluation and implementation of the new system to ensure that it works as per their expectations. The management of the firm and its entire team of employees are expected to be involved in the entire process of coming up with and implementing the solution.
Sources of finance
Securities and Commodities Authority is prohibited by law to engage in for-profit business ventures because this may bring a conflict of interest. It means that the only source of income for this authority is the federal government of the United Arab Emirates.
As explained in the section above, there are specific stakeholders who are interested in this new solution that has been proposed for this firm. The federal government of the United Arab Emirates is the first stakeholder interested in the new system proposed for SCA. It is the sponsor of this firm and is keen on improving its efficiency in the market.
Individuals and firms operating in the capital market are also important stakeholders who would want to see this authority operating efficiently in meeting their various needs. The entire workforce of this firm forms the third category of stakeholders who want to see this authority become efficient in service delivery.
Hassan, Kabir, and Mervyn Lewis. Handbook on Islam and Economic Life. London: McMillan, 2014. Print.
Hassan, Kabir, and Michael Mahlknecht. Islamic Capital Markets: Products and Strategies. Chichester: Wiley, 2011. Print.
Kellan, Moses. Integrating Idea Generation and Idea Evaluation in the Study of Group Creativity: Effects of Different Group Procedures on Brainstorming Effectiveness and Group Satisfaction. New York: Springer, 2006. Print.
Lager, Thomas. Managing Process Innovation: From Idea Generation to Implementation. London: Imperial College Press, 2010. Print.
Terterov, Marat. Doing Business with the United Arab Emirates. London: GMB, 2006. Print.
Vogel, Thomas. Breakthrough Thinking: A Guide to Creative Thinking and Idea Generation. Cincinnati: How Books, 2014. Print.