18 December 2018 — DFSA Enhances its Funds Regime

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Dubai, UAE, 18 December 2018: Changes to the DFSA Collective Investment Funds regime, on which the Dubai Financial Services Authority ("DFSA") consulted in October last year, will come into force today coinciding with the enactment of the DIFC Companies Law 2018 ("Companies Law"). The DFSA consultation included a wide-ranging set of proposals to support the continued development of the growing Funds industry in the Dubai International Financial Centre ("DIFC"). The DIFC now has almost 70 Funds, most of which have been registered over the last two years.

The new provisions strengthen the DFSA's commitment to meeting international standards, particularly those of the International Organization of Securities Commissions ("IOSCO") and the Financial Stability Board ("FSB"), through measures to enhance liquidity risk management in open-ended Funds. Open-ended Funds give their investors the right to have their Units redeemed at a price calculated based on the net asset value of the Fund's portfolio of assets.

The new provisions:

•   incorporate the Public Company and Private Company distinction, introduced by the Companies Law, into the Funds regime, so that all Investment Companies with retail investor participation would need to be Public Companies;
•   remove the current limits on the number of investors which a DIFC Fund can have. Currently only a Public Fund is able to have more than 100 investors (including retail), with an Exempt Fund being limited to 100 or fewer investors and a Qualified Investor Fund ("QIF") being limited to 50 or fewer investors. These changes do not alter the current focus of regulation of these Funds, which is based on the type of investors (e.g. any Fund with retail investors will receive higher levels of scrutiny).
•   introduce a new class of specialist Funds for Exchange-Traded Funds ("ETFs"). These are open-ended Funds, the Units of which are listed and traded on exchanges. ETFs have become increasingly popular among both retail and institutional investors over the past several years. Their introduction would give greater choice of Funds available to investors from the DIFC, with Fund Managers also having a greater choice of Funds they could offer; and
•   enables a Fund established as an Investment Company to be managed by its sole Corporate Director licensed as a Fund Manager to manage only that Fund and no other. This is a model available in the European Union, and we have made some adjustments to suit the DIFC regime.

The changes to the legislation can be viewed under the Notice of Amendments section on the DFSA website.

Bryan Stirewalt, the Chief Executive of the DFSA, said: "The DFSA continues to enhance its regulatory regime to facilitate the growth of the DIFC and the development of the financial sector in Dubai and the UAE. We have introduced a number of significant changes to the DFSA Funds regime to support and complement the continued development of the DIFC Funds sector, which has grown significantly during the past two years."

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For further information please contact:

Corporate Communications
Dubai Financial Services Authority
Level 13, The Gate, West Wing
Dubai, UAE
Tel: +971 (0)4 362 1613

Editor's notes:

The DFSA is the independent regulator of financial services conducted in or from the Dubai International Financial Centre (DIFC), a purpose-built financial free-zone in Dubai. The DFSA's regulatory mandate covers asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, an international equities exchange and an international commodities derivatives exchange. In addition to regulating financial and ancillary services, the DFSA is responsible for supervising and enforcing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) requirements applicable in the DIFC. The DFSA also exercises delegated enforcement powers under the DIFC Companies Law. These include powers to investigate the affairs of DIFC companies and partnerships where a material breach of DIFC Companies Law is suspected and to pursue enforcement remedies available to the Registrar of Companies (Roc).

Bryan Stirewalt was appointed Chief Executive of the DFSA on 1 October, 2018, after nearly eight years as the DFSA's Managing Director of the Supervision Division. In his role as Chief Executive, Bryan will take the lead in steering the work of the DFSA and further developing its capability as a robust regulator delivering world-class financial regulation in the DIFC. Bryan has played a vital part in executing the DFSA's regulatory mandate and developing its risk-based supervision framework. Bryan plays an active role in supporting the work of international standard-setting bodies. He now serves as the Co-Chair of the Basel Consultative Group (BCG), which provides a forum for deepening the Basel Committee on Banking Supervision's engagement with non-member, global supervisors on banking supervisory issues. Through this role, Bryan also serves as an Observer at the Basel Committee on Banking Supervision.

Statistics on DIFC funds industry

Public Funds 14
Exempt Funds 14
Qualified Investor Funds 39
Domestic Fund Managers 54
External Fund Managers 2