Stock market trading violations almost doubled in the UAE last year as the country's regulator boosted enforcement efforts.
"This is part of our efforts to build confidence among investors by enhancing transparency and fairness in our markets," the Emirates Securities and Commodities Authority (SCA) said.
The SCA uncovered 209 violations against brokerage companies through inspection visits and monitoring trading activities, up from 113 the previous year.
The regulator also recorded 11 cases of trading malpractices, seven cases of front-running operations, three cases of insider trading and one case of cycle trading, all types of price manipulation. The SCA also cited 72 violations of disclosure by publicly listed companies.
"It is positive that SCA is flexing its muscles and acting against insider trading and ensuring market integrity," said Nick Nadal, the director at Hawkamah Institute for Corporate Governance in Dubai. "Part of the regulator's responsibility is to give the fines to signal the transition as markets mature and regulations become more robust."
Retail investors, who make up the bulk of trading activity on the local bourses, still need to be educated in good practice, said Abdulla Salem al Nuaimi, the head of market surveillance at the Abu Dhabi Securities Exchange. "Executives of listed companies should also be careful about how they release information, whether in informal settings or not, because they could [be detrimental] to trading," he added.
Unlike many developed markets, regulators tend not to publish the names of individuals and companies who violate their regulations.
The most high-profile case came when Riad Kamal, the former Arabtec Holding chief executive, was barred in January from trading for six months after selling shares less than 10 days before making a company announcement, but that action became public only because it was leaked to the press.
SCA is acting as an active regulator, part of a growing trend across the GCC, legal experts say.
"The trend towards greater transparency and disclosure is only likely to increase," said Niall O'Toole, a partner at Clyde & Co in Abu Dhabi. "This is both consistent with international trends and with how local and regional customs and culture are evolving."
Strong corporate governance regulations should improve foreign investment, analysts say.
"There is a wide body of research that shows the strong positive relationship between corporate governance or the transparency level of hosting countries and foreign direct investment performance within those hosting countries," said Dr Roger Barker, the head of corporate governance at the Institute of Directors in the UK.
This comes as regional markets struggle to revive liquidity and boost volumes as political upheaval and underperforming equities dampen investor sentiment.
The Abu Dhabi Securities Exchange General Index is down 5.5 per cent in the past six months, while the Dubai Financial Market General Index is down 7.5 per cent during the same period.
Investment companies say the regulator should actively promote and improve the business environment for the sector in the UAE.
"Much more needs to be done to increase liquidity, and attract new companies to list on the local exchanges," said Mohammed Ali Yasin, the chief investment officer at CAPM Investments in Abu Dhabi. "The markets are approaching a very important crossroad in their future and needing the support of SCA."