The UAE Government has enacted two new Federal Decree Laws — one governing the Capital Market Authority and another regulating capital markets — as part of broader efforts to modernise the country’s financial legislation and reinforce market resilience, transparency, and competitiveness.

The new laws aim to further align the UAE’s regulatory framework with leading international standards while strengthening the independence of the Capital Market Authority (CMA) and enhancing its role in maintaining the stability and integrity of the capital markets, as well as promoting fair competition.

Under the legislation, the Capital Market Authority’s key responsibilities are clearly defined. These include regulating and supervising licensed financial activities and issuers, issuing regulatory standards to ensure fair and efficient market practices, promoting sound governance principles, monitoring systemic risks, and reinforcing the UAE’s position as a globally recognised financial hub.

The Decree Laws also support greater compliance with global best practices and the requirements of international financial institutions and organisations such as the International Organization of Securities Commissions (IOSCO), the World Bank, the International Monetary Fund (IMF), and the Financial Action Task Force (FATF). In addition, they facilitate international cooperation, mutual recognition mechanisms, and cross-border recognition of financial products.

To strengthen consumer protection and financial inclusion, the laws introduce a comprehensive framework requiring licensed entities to ensure access to suitable financial services for all segments of society. This approach reflects ongoing digital transformation and fintech advancements, while promoting sustainability and leadership within financial services.

The framework further mandates the implementation of national financial awareness programmes in collaboration with financial institutions and civil society. It also reinforces existing protective practices, particularly those aimed at responsible lending, aligning credit facilities with customers’ income levels, and safeguarding clients against unsound financial practices.

The Federal Decree Law regulating capital markets introduces early intervention tools designed to address signs of financial weakness among licensed entities. These measures are intended to preserve financial stability and protect clients and may include recovery plans, enhanced capital and liquidity requirements, organisational restructuring, temporary management appointments, or, where necessary, merger, acquisition, or liquidation actions.

As the designated resolution authority, the Capital Market Authority is empowered to manage financial distress situations through measures such as replacing management, appointing temporary administrators, restructuring capital, and implementing rescue mechanisms to ensure the continuity of essential financial activities.

The Decree Laws also strengthen enforcement by allowing administrative penalties to be scaled according to the severity of violations and the value of transactions involved. The Authority may impose fines of up to ten times the profit gained or losses avoided through non-compliant conduct.

Additionally, the legislation permits settlement with violators before final court rulings and allows the publication of sanctions on the Capital Market Authority’s official website, reinforcing transparency and market discipline.

Source: WAM News