The Emirates Securities and Commodities Authority (ESCA), the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) and the Dubai Financial Services Authority (DFSA) which regulates the Dubai International Financial Centre (DIFC) will introduce the new passporting facility.
The service, which has been under discussion since November last year, is designed to allow any funds licensed by one of the authorities to be sold across the UAE.
Industry observers in Dubai have welcomed the move as a sign of greater cooperation among the three regulators, and say it should encourage more funds to be established in the UAE rather than in places like Ireland, Luxembourg or Mauritius.
“The passporting system will allow a fund company to decide which UAE jurisdiction best meets their needs, safe in the knowledge that all distribution channels within the country should then be open to them,” said Peter Duke, head of Middle East & Africa Intermediary Sales for Fidelity International.
“The infrastructure behind a fund – transfer agent, custodian, auditor etc. – is quite extensive and as such the main fund hubs will attract a lot of ancillary services to the country,” Duke said.
According to Sultan bin Saeed Al Mansouri, minister of the Economy and chairman of the board of ESCA, the new passporting system was an important step to inspire the development of the mutual funds’ market.
“The implementation of the Passporting Agreement will enhance the UAE’s position as an international financial centre and a platform for entrepreneurship,” he said in a statement.
“This cooperation will allow new market leaders, investors and companies to expand and grow in the UAE markets, which supports the SCA’s efforts in providing the appropriate climate for the investment of savings and funds in securities in line with the objectives of the UAE economic development process.”
Richard Teng, chief executive officer of the FSRA in the ADGM said: “The UAE funds market is on the cusp of exponential growth and the new funds passporting regime will stimulate the development of the domestic investment funds industry with a broader variety of funds and enable funds to be supported across the UAE.
“With the closer cooperation with our regulatory partners, we are able to share pertinent regulatory information and supervisory updates to support licensing of domestic funds.”
Bryan Stirewalt, chief executive of the DFSA said: “We are confident that agreeing this facilitative regime, and enacting its relevant legislation and rules, will not only complement our existing regime for domestic funds but will also support the growth of the UAE funds market in general.”