Text size:

  • Small
  • Normal
  • Large
Under the new regulation, SCA will become the licensing authority for investment funds, which are currently regulated by the Central Bank. Pawan Singh / The National
Under the new regulation, SCA will become the licensing authority for investment funds, which are currently regulated by the Central Bank. Pawan Singh / The National

Change in oversight for fund managers

The Securities and Commodities Authority has finalised plans for a shake-up of the investment management industry, under which it will assume oversight of fund managers.

The Securities and Commodities Authority (SCA) has finalised plans for a shake-up of the investment management industry, under which it will assume oversight of fund managers.

Under the new regulation, SCA will become the licensing authority for investment funds, which are currently regulated by the Central Bank.

The rules will enhance transparency and oversight of funds for the mass market and could entice greater investment, said Tariq Qaqish, the deputy head of asset management at Al Mal Capital.

"Having the proper regulations and best practices will attract not only investment managers to launch new products, it will attract foreign investors if they're happy with the regulations," he said.

The new Investment Funds Regulations, first proposed in 2009, are "currently awaiting publication by the Ministry of Justice", a spokesman for SCA said, declining to indicate a date for their enactment.

The UAE's large financially savvy expatriate population gives the country great appeal to regional fund managers, but they have complained that regulation is deficient. The UAE this year set the wheels in motion to move the country towards a "twin-peaks" model of financial regulation, where the Central Bank sets monetary policy and regulates risk, while the SCA handles market conduct and investor protection.

As part of this, the remit of the SCA will be significantly expanded to cover insurance regulation and consumer protection. The body is expected to be renamed under the working title of the Emirates Financial Services Authority.

Until now, much of the Arabian Gulf's fund-management industry has centred on Bahrain because of the high quality of regulation by the kingdom's central bank.

Revamped laws governing asset management would help the UAE to compete for investment funds more effectively, Mr Qaqish said.

Banks and fund managers have complained that uncertainty over the form that the new regulations would take - and protracted delays in issuing the new laws - had made it difficult to establish funds in the UAE for all but the biggest institutional clients.

Funds managed from the Dubai International Financial Centre (DIFC) would not be affected by the changes, unless they offered services to the UAE retail market. The DIFC is regulated by the Dubai Financial Services Authority.

Tim Plews, the head of financial services in the Middle East at the law firm Clifford Chance, said the lack of clarity in regulation had been poorly received by firms in the free zone.

"It's had a chilling effect on the firms in the DIFC as to any ambitions they might have had to promote funds to the UAE mass market," he said "There's a range of fund managers who fall into that category and who've ignored the UAE mass market and focused on what they generally do - discreet private placements of a large size in the funds they promote across the region."

The SCA has moved to allay the concerns of boutique investment firms by allowing for "light-touch" regulation of funds placed privately with big institutional investors and high-net-worth individuals.

Previously, fund managers had raised concerns that the new rules left them disadvantaged to the benefit of banks, limiting the creation of sophisticated instruments in favour of mass market funds for retail investors.

ghunter@thenational.ae

twitter: Follow and share our breaking business news. Follow us

iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 A sign points the way to an outdoor market popular with German visitors on the Polish side of the German-Polish border. Sean Gallup / Getty Images

In pictures: A decade since the European Union went east

May 1 will mark 10 years since the European Union expanded east, taking in countries like Poland, the Czech Republic and the Baltic states as new members. And though the border region between Germany and Poland is flourishing with trade and cultural exchange, the open border has also brought a sharp rise in crime.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National