The UAE government has enacted two federal decrees related to the Financial Markets Authority, focusing on the regulation and organization of financial markets. These measures are part of the nation’s ongoing efforts to modernize the legislative and regulatory framework governing the financial sector, enhancing its stability, efficiency, and competitiveness while aligning the national system with the highest international standards. The aim is to reinforce the independence of the Financial Markets Authority and its role in ensuring the stability and integrity of the financial market, as well as promoting fair competition in the sector.
The decrees are designed to maintain the stability and safety of the financial markets, clearly defining the core responsibilities of the Financial Markets Authority. These responsibilities include regulating licensed financial activities and issuers, overseeing them according to international standards, issuing rules and criteria to guarantee fair and effective financial practices, promoting governance principles, monitoring and analyzing systemic risks, and developing the financial market in the UAE to be a recognized international financial hub.
Furthermore, the decrees aim to enhance alignment with global practices and adherence to the requirements of international organizations relevant to the financial sector, such as the International Organization of Securities Commissions (IOSCO), the World Bank (WB), the International Monetary Fund (IMF), and the Financial Action Task Force (FATF), among others. This is expected to improve international assessments.
Additionally, the two decrees will foster cross-border cooperation and support the UAE’s goal of establishing strong relationships with countries worldwide. They will also simplify procedures for mutual recognition and open doors for recognizing cross-border financial products.
In terms of consumer protection and financial inclusion, the decrees establish a comprehensive system mandating licensed entities to enable all segments of society to access appropriate financial services, in line with digital advancements and financial technology. This will ensure leadership and sustainability in financial activities and services. Frameworks for national awareness programs will be developed in collaboration with the financial sector and community institutions, reinforcing positive practices from the past, especially those regarding credit facilities aligned with client income while protecting against irresponsible practices.
The decree concerning the regulation of financial markets includes proactive measures for early intervention in response to any signs of deterioration in a licensed entity’s conditions. This aims to ensure financial stability for financial activities and services, protecting clients through recovery plans, imposing additional capital and liquidity requirements, re-evaluating strategies and administrative structures, appointing temporary committees or direct management for the licensed entity, and if necessary, undertaking merging, acquisition, or liquidation actions, along with special procedures if the entity fails to rectify its conditions.
According to the decree, the Financial Markets Authority, acting as the settlement and resolution authority, plays a crucial role in managing financial crises by isolating and appointing new management, designating a temporary manager for the licensed entity and its assets, restructuring capital, and conducting rescue operations to ensure continuity of essential activities.
Regarding administrative penalties, the decree has increased the ceiling for fines in proportion to the severity of the violations and the volume of transactions. It also allows the authority to impose fines that can be up to ten times the profit made by the violator or the amount saved from losses. Additionally, there is a provision for settling with violators before final court decisions are issued, as well as the possibility of publishing penalties on the official website of the Financial Markets Authority, enhancing transparency and market discipline.
The decrees aim to ensure the stability and safety of the financial market sector.
They provide a framework for maintaining financial stability in activities and services while protecting clients.
The caps on administrative fines have been raised in accordance with the severity of violations and transaction volumes.