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The UAE has issued two federal decree laws covering the Capital Market Authority and the regulation of capital markets, as part of broader efforts to modernise the country’s financial legislation and strengthen market stability, efficiency and competitiveness.
The decree laws aim to align the UAE’s regulatory framework with international standards and reinforce the independence of the Capital Market Authority, including its role in safeguarding the soundness and stability of the capital markets and ensuring fair competition, as reported by the state news agency WAM.
Capital Market Authority’s core mandates are defined
Under the new framework, the Capital Market Authority’s core mandates are clearly defined.
These include regulating licensed financial activities and issuers, supervising them in line with international standards, issuing regulations to ensure fair and effective financial practices, supporting governance principles, monitoring system-related risks, and enhancing the global standing of the UAE’s capital markets as an international financial centre.
The decree laws also seek to improve compliance with requirements set by international bodies such as the International Organization of Securities Commissions, the World Bank, the International Monetary Fund and the Financial Action Task Force.
They support greater international cooperation, facilitate mutual recognition procedures and enable the cross-border recognition of financial products.
In the area of consumer protection and financial inclusion, the decree laws introduce an integrated framework obliging licensed entities to provide access to appropriate financial services for all segments of society, in line with digital transformation and financial technology developments.
The framework also supports sustainability in financial services and provides for national financial awareness programmes in cooperation with the private sector and civil society institutions.
The laws affirm the continuation of existing consumer protection practices, including measures to align credit facilities with clients’ income levels and protect consumers from irresponsible financial practices.
The decree law regulating capital markets introduces early intervention measures designed to address signs of financial deterioration among licensed entities.
These measures include activating recovery plans, imposing additional capital and liquidity requirements, adjusting operational and administrative structures, appointing temporary committees, placing firms under direct administration, and pursuing mergers, acquisitions or liquidation where necessary.
Capital Market Authority to act as the resolution authority
Under the new framework, the Capital Market Authority acts as the resolution authority, with powers to manage financial crises through the dismissal and appointment of management, the appointment of temporary administrators, capital restructuring and the implementation of rescue measures to ensure the continuity of critical activities.
The decree laws also strengthen the administrative sanctions regime by allowing higher fines based on the severity of violations and transaction size.
The authority is authorised to impose fines of up to ten times the profit gained or ten times the loss avoided by a violator.
The framework permits reconciliation with violators before final judicial rulings and allows for the publication of sanctions on the authority’s official website, measures intended to enhance transparency and market discipline.
