SCA, the DFSA and the ADGM's FSRA reach agreement on the licensing and promotion of investment funds

Dubai, UAE, 28 November 2018:   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 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 H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and the SCA Board Chairman, and H.E. Ahmed Ali Al Sayegh, Minister of State to the UAE and Chairman of the ADGM. The agreement was signed by Dr. Obaid Al Zaabi, Chief Executive Officer of SCA, Bryan Stirewalt, Chief Executive of the DFSA and Richard Teng, Chief Executive Officer of the FSRA.

 

Following the signing, H.E. Sultan Al Mansoori Minister of Economy and Chairman of the SCA, 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.”

 

His Excellency added that the agreement implements passporting mutual recognition as a regulatory mechanism for the promotion and supervision of investment funds, and encourages foreign licensed firms in financial free zones based in other countries to move to the UAE market.

 

The agreement contributes to the realisation of one of the main roles assigned to SCA, and that 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. 

 

H.E. Ahmed Ali Al Sayegh, Minister of State to the UAE and Chairman of ADGM 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 institutions to access growth opportunities in the UAE and wider region and support the growth of the capital markets.  The passporting regime dovetails well with ADGM’s ongoing efforts to maintain a robust and innovative financial services market to support the dynamic needs of our economy.  ADGM will continue to uphold the highest international regulatory standards and practices, in the best interests of our investors and marketplace.”  

 

Mr Saeb Eigner, Chairman of the DFSA said:  “This agreement between peer 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 H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President,  Prime Minister of the UAE, and Ruler of Dubai, implemented by 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 our fellow regulators in the UAE and around 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 bodies confirmed that funds, which are 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, outside the financial free zones, or in either of the DIFC or ADGM, to potential investors situated 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 establishment of new investment funds, in addition to facilitating the process of conducting 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.