Under the regime, first announced in June 2013, all funds sold in the United Arab Emirates must be registered with the SCA and a fee paid by each institution for each fund it wishes to distribute.
From the outset, the regime has been met by criticism, with asset managers and those distributing the products, largely the retail and private banks, arguing the onus should be on the asset manager to register the fund and pay the fee, not the distributor.
There have also been calls for the fees to be greatly reduced, as they are significantly higher than in other jurisdictions.
According to industry sources, part of the catalyst for a renewed pressure on the SCA to review the regime, is due to the fact that many organisations have begun receiving invoices from the regulator.
Nigel Sillitoe, chief executive of research company Insight Discovery, said it is “rumoured that one major bank distributor had received an invoice for US$1m (AED3.6m), while other invoices have apparently ranged between $200k and $400k”.
One person who has been a relatively outspoken critic of the regime since it was first mooted last year is Peter Duke, head of fund distribution, Middle East at Fidelity Worldwide. Duke said he understands the SCA is “considering some amendments to the fee structure, but that until a new law has been introduced, the existing rules apply”.
Duke added that he has emphasized in previous discussions with the SCA that the costs associated with fund registration are high, both compared to the size of the mutual fund market in the UAE and the fees levied in other jurisdictions.
“I believe this works against the interests of the customer as it could potentially restrict choice or increase subscription costs,” he said.
The Securities and Commodities Authority declined to comment on the issue.
Click here to read a roundtable report where HSBC Asset Management's Dan Rudd, Schroder's William Wells, Mashreq Capital's Abdul Kadir Hussain and Fideilty Worldwide's Peter Duke discuss the issue in depth