{"id":90718,"date":"2024-04-03T00:00:00","date_gmt":"2024-04-03T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/banks-can-no-longer-market-foreign-funds-to-retail-investors-in-the-emirates\/"},"modified":"2024-04-03T00:00:00","modified_gmt":"2024-04-03T00:00:00","slug":"banks-can-no-longer-market-foreign-funds-to-retail-investors-in-the-emirates","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2024\/04\/03\/banks-can-no-longer-market-foreign-funds-to-retail-investors-in-the-emirates\/","title":{"rendered":"Banks can no longer market foreign funds to retail investors in the Emirates"},"content":{"rendered":"

Retail investors can no longer subscribe to offshore funds and asset managers <\/strong>after the UAE\u2019s financial services watchdog the Securities and Commodities Authority<\/a> \u2019s (SCA) rule (pdf)<\/a> banning onshore banks from promoting or marketing foreign funds to retail investors entered into effect last Sunday. Under this rule, only SCA-registered funds can be promoted in the UAE to retail investors. <\/p>\n

Background: <\/strong>The SCA issued the decision in January last year<\/a>, prohibiting funds and assets managers based outside of the UAE from being publicly offered for subscription in the UAE. The SCA had granted a temporary grace period for foreign funds that were already registered with the SCA for retail promotion that was extended until 31 March 2024, after an initial deadline on 30 June 2023.<\/p>\n

Exemptions: <\/strong>Professional investors, such as federal or local governments, government bodies and wholly-owned state-owned companies can still buy into foreign funds and invest in foreign assets, with investments of over AED 500k. They also need to have no less than AED 75 mn in assets, and an annual income of at least AED 150 mn, according to Gulf News<\/a>. Foreign residents are also allowed to subscribe to overseas funds, provided they sign up through their offshore bank accounts. <\/p>\n

Alternative options:<\/strong> Foreign fund managers seeking to continue offering to the retail market in the UAE have multiple options, including either obtaining a fund management license from SCA to establish a domestic feeder fund allowing retail investors to invest in a foreign master fund, or apply for a management company license, law firm Simmons and Simmons<\/a> explains. They could also appoint a local, third-party SCA-licensed management company as a first step. <\/p>\n

The SCA is looking to bring fund managers to the UAE:<\/strong> Under the decision, the SCA facilitated the requirements for foreign managers establishing an onshore presence by reducing minimum capital requirements from AED 50 mn to AED 1 mn<\/a>, reducing registration fees, shortening license processing time, and easing accreditation requirements.<\/p>\n

The decision helps boost the local funds market<\/strong> by limiting capital outflows, consequently \u201c[setting] up more sustained inflows into local stocks,\u201d Capital Plus managing director Naqqash Ahmed told Gulf News. It also aims to crack down on the unsupervised operations of unlicensed foreign funds in the Emirates. <\/p>\n

The SCA\u2019s efforts have borne fruit<\/strong>, with an influx of foreign asset managers flocking<\/a> to the UAE over the past year. <\/p>\n

What\u2019s next? <\/strong>The SCA is hoping to attract more foreign funds to set up shop in the UAE and encourage the establishment of domestic funds, and is collaborating with other GCC financial services regulators to draft the GCC Funds Marketing Passport, pending final approval from the GCC council, according to Simmons and Simmons. The passport will mirror the EU UCITS\/AIFMD Passport, enabling funds from one GCC jurisdiction to be marketed in others.The SCA is also in early talks with the Dubai Financial Services Authority and the Abu Dhabi Global Market to introduce a dual licensing framework for fund managers. <\/p>\n","protected":false},"excerpt":{"rendered":"

Foreign funds are encouraged to register with the SCA<\/p>\n","protected":false},"author":1,"featured_media":90719,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1547],"tags":[29,1342],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-90718","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-capital-markets","tag-capital-markets","tag-investment","wpautop","entry"],"acf":{"mongo_id":"a16449a8-f2b9-4c70-9026-23cdedfaa7cc","order":"0","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/4\/286.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Banks can no longer market foreign funds to retail investors in the Emirates","related_issue":[90707],"teaser":"Foreign funds are encouraged to register with the SCA","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/4\/.0dce1c26-dfee-4770-a7a9-6b3f0649af91.mp3"},"yoast_head":"\nBanks can no longer market foreign funds to retail investors in the Emirates - 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