UAE Issues Two Laws On Regulation Of Capital Market

The UAE Government has issued two federal decree laws, concerning the Capital Market Authority and the regulation of capital markets.

This comes as part of the UAE's ongoing efforts to modernise the legislative and regulatory framework governing the financial sector and enhance its stability, efficiency, and competitiveness.

The Decree Laws also further alignment of the national regulatory ecosystem with the highest international standards and reinforce the independence of the Capital Market Authority and its role in safeguarding the soundness and stability of the capital markets sector and ensuring fair competition.

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The two Federal Decree Laws aim to preserve the stability and integrity of the capital markets sector and seek to enhance alignment with global best practices and compliance with the requirements of international organisations concerned with the financial sector, including the International Organization of Securities Commissions, the World Bank, the International Monetary Fund, and the recommendations of the Financial Action Task Force, among other requirements that contribute to improving international assessments.

Regarding consumer protection and financial inclusion, the two Federal Decree Laws establish an integrated framework that obliges licensed persons to enable all community segments to access appropriate financial services, in line with digital transformation and financial technology developments, while supporting sustainability and leadership in financial activities and services.

The Federal Decree Law concerning the Regulation of Capital Markets introduces proactive early intervention measures to address indicators of deterioration in the financial position of licensed persons, to ensure the financial stability of financial activities and services and protect clients.

These measures include activating recovery plans, imposing additional capital and liquidity requirements, adjusting strategies and administrative and operational structures, appointing temporary committees or placing licensed persons under direct administration, taking merger, acquisition, or liquidation measures when necessary, and applying special measures where a licensed person fails to rectify its position.

Pursuant to the Decree Law, the Capital Markets Authority, in its capacity as the resolution authority, plays a central role in managing financial crises through the dismissal and appointment of management, the appointment of a temporary administrator to manage the licensed person and its assets, capital restructuring, and the implementation of rescue measures to ensure the continuity of critical activities.

With regard to administrative sanctions, the Decree Laws provide for raising administrative fines in proportion to the gravity of violations and the size of transactions, and authorise the Authority to impose proportional fines of up to ten times the profit realised by the violator or the 10 times the value of the loss avoided.

It also allows for reconciliation with violators prior to the issuance of final judicial decisions and permits the publication of sanctions on the official website of the Capital Markets Authority, thereby enhancing transparency and market discipline.

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