SCA clears robo-advisors for UAE launch: The Securities and Commodities Authority (SCA) has approved regulations (pdf) allowing licensed portfolio management firms to offer robo-advisory services. Robo-advisory services will be offered under the UAE’s existing discretionary and non-discretionary portfolio management frameworks and remain subject to client agreements.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

Uh, Enterprise, what’s robo-advisory? The move allows digital investment platforms to deliver automated investment recommendations using artificial intelligence and algorithm-driven models. The SCA’s CEO Waleed Al Awadhi said the integration of AI solutions into investment advisory was a “transformative turning point,” according to Khaleej Times.

Safeguarding measures: The regulation mandates quarterly IT audits and cybersecurity reports, periodic reviews of algorithms and systems, and a clear disclosure of risks and costs to investors. The regulation also requires firms to provide a back-up plan in the event of the termination of the platform that would secure investors’ data and service continuity.

The big picture: The framework adds to a series of SCA regulatory moves to modernize the Emirates’ capital markets, including:

  • Issuing draft rules for distributed ledger technology-based tokenized assets;
  • Regulating special purpose vehicles (SPVs), including the creation of a dedicated SPV manager role;
  • Approving a GCC fund passporting framework to enable cross-border marketing of investment funds within the Gulf, set to be implemented this year;
  • Proposing changes to corporate governance rules to allow board chairs at public joint-stock companies to also serve as managing directors.
Tags: