27 September 2006 — DFSA consults on Use of Prime Brokers by Hedge Funds

Dubai, September 27, 2006: The DFSA has issued Consultation Paper No 37 for public comment.

The Paper, which is posted on the DFSA website seeks comment on the DFSA’s proposals to enhance the Collective Investment Rules, which the DFSA introduced in April 2006.

The proposed enhancements are designed primarily to permit operators of private Hedge Funds in the DIFC to appoint prime brokers under terms of agreement, which allow the prime brokers to commingle Fund assets and to use the Fund assets as collateral according to generally accepted industry practice.

The proposed amendments also require that certain safeguards must be in place before prime brokers will be permitted to commingle and collateralise Fund assets.

As a risk based regulator, the DFSA, in consultation with industry, strives to foster the principles of integrity, transparency and efficiency in the DIFC financial markets.

By developing these proposals in line with international best practice, the DFSA is furthering its regulatory objective of ensuring that the DIFC is a well regulated and internationally competitive financial market.