UAE Financial Regulators Reach Agreement on Licensing, Promoting Investment Funds

The Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA) of the Dubai International Financial Centre (DIFC), and the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) announced today that they had reached an agreement on facilitating the licensing of domestic funds by each authority for promotion across the UAE.

The three authorities signed the regulatory agreement in Dubai in the presence of Sultan bin Saeed Al Mansouri, Minister of Economy, and the SCA Board Chairman, and Ahmed Ali Al Sayegh, Minister of State, and Chairman of the ADGM. The agreement was entered into by Dr. Obaid Al Zaabi, CEO of the SCA, Bryan Stirewalt, Chief Executive of the DFSA, and Richard Teng, CEO of the FSRA.

Following the signing, Al Mansouri said: "Signing this agreement and implementing its provisions will foster the relations between the three authorities. It will facilitate the licensing and promoting of investment funds to attract foreign investment. It will also pave the way for savings to be directed towards new financial instruments such as investment funds and activate a number of financial services and activities related to investment funds such as custodian, investment management, and promoting, as well as the management of investment funds."

He added that the agreement implements passporting "mutual recognition" as a regulatory mechanism for promoting and supervising investment funds as well as encouraging foreign firms licensed in financial free zones in other countries to operate in the UAE market. The agreement contributes to the fulfilment of one of the main roles assigned to the SCA, which is to provide the appropriate environment for the investment of savings and funds in securities, in line with the objectives of the country’s economic development.

Al Sayegh said: "We welcome this partnership to strengthen UAE’s position as an international financial and business hub. This collaboration will enable greater number of current and new market participants, investors, and companies to access growth opportunities in the UAE and the region as a whole. The agreement is in line with ADGM’s ongoing efforts to maintain a robust and innovative financial services market that supports the dynamic needs of our economy. The ADGM will continue to uphold the highest international regulatory standards and practices, in the best interests of our investors and marketplace."

Saeb Eigner, Chairman of the DFSA said: "This agreement between counterpart regulators reflects our joint efforts to encourage the development of the domestic funds market and create a stronger and more diversified financial market in the UAE. The DFSA remains committed to developing the financial services sector and fostering long-term economic growth for the UAE. This move supports the vision of the DIFC's Founder, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, implemented by the DIFC’s President H.H. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, to transform Dubai into a global and dynamic financial centre and an attractive hub for international investment business.

Cooperating with counterpart regulators in the UAE and across the world is a cornerstone of our regulatory approach and has been a key factor in establishing and maintaining trust and confidence in our international financial centre."

The SCA, DFSA, and FSRA agreed on a common legislative framework in their respective jurisdictions, enabling them to facilitate regulatory coordination amongst them in licensing domestic funds upon the adoption of the legislation. The three authorities confirmed that funds, licensed in accordance with the provisions of this agreement and the licensing regulations, may be promoted in or from the financial free zones in the UAE, , in line with the provisions of the agreement and the licensing regulations. Under the terms of the agreement, a notification and registration facility will be established by each regulator, facilitating the promotion and sale of domestic funds, set up within the UAE, in either of the DIFC or ADGM, to potential investors based anywhere in the UAE, and under a single licence.

The SCA, DFSA, and the FSRA have also agreed to establish common rules to implement the regulatory agreement. The regime is expected to stimulate the development of the domestic investment funds market by encouraging the incorporation of new investment funds, in addition to facilitating the conduction of business in the UAE.

Based on this agreement, the regime will provide greater protection to investors, as a result of the enhanced exchange of regulatory information amongst the regulatory bodies in relation to the promotion and sale of local investment fund units in the UAE.

The DFSA and FSRA will shortly commence consultation on the proposed regime. The SCA regulates the capital markets operating in the UAE, with the exception of financial free zones, and the DFSA is the independent regulator of financial services conducted in or from the DIFC, whilst the FSRA is the independent regulator for financial services in or from the ADGM.