The UAE government issues two federal decrees and laws regarding the Capital Market Authority and the regulation of the capital market

The UAE government issued a federal decree law regarding the Capital Market Authority, and a federal decree law regarding regulating the capital market, as part of the UAE’s ongoing efforts to modernize the legislative and supervisory framework for the financial sector, enhance its stability, efficiency, and competitive ability, in a way that consolidates the compatibility of the national system with the highest international standards, and enhances the independence of the Capital Market Authority and its role in the safety and stability of the financial market sector and fair competition in this sector.

The basic objectives of the Capital Market Authority
The decree-law aims to maintain the stability and safety of the capital market sector. It also specifies the basic tasks of the Capital Market Authority, foremost of which is regulating and supervising licensed financial activities and issuers in accordance with international standards, issuing systems and standards to ensure fair and effective financial practices, supporting governance principles, monitoring and analyzing systemic risks, and developing the capital market sector in the country as a financial center with an international reputation.

Compatibility with international standards
The decrees-law aim to raise the level of compatibility with global practices and adherence to the requirements of international organizations concerned with the financial sector, including: the International Organization of Securities Commissions (IOSCO), the World Bank (WB), as well as the International Monetary Fund (IMF), the recommendations of the Financial Action Task Force (FATF), and other requirements that would improve international assessments.
On the other hand, the decree-laws will contribute to strengthening cross-border cooperation and supporting the state’s direction in building strong relations with all countries of the world, in addition to facilitating mutual recognition procedures and opening the door to the recognition of cross-border financial products.

Keeping pace with digital transformation and innovation in financial services
In the field of customer protection and financial inclusion, the decrees-law establish an integrated system that requires licensed persons to enable all segments of society to access appropriate financial services, keeping pace with digital development and financial technology, and ensuring leadership and sustainability in financial activities and services. Frameworks have also been established for national awareness programs in cooperation with the financial sector and community institutions, and to emphasize the continuation of positive practices previously in place, especially those It is related to aligning credit facilities with the client’s income and protecting him from irresponsible practices.

Proactive measures to ensure financial stability and customer protection
The decree law regarding the regulation of the capital market includes proactive measures for early intervention to address any indicators of deterioration in the conditions of the licensed person, with the aim of ensuring the financial stability of financial activities and services and protecting customers, including activating recovery plans, imposing additional requirements for capital and liquidity, amending the strategy and the administrative and operational structure, appointing temporary committees or direct management of the licensed person, taking merger, acquisition or liquidation procedures when needed, and implementing procedures Especially for the licensed person if his situation is not corrected.

According to the decree law, the Capital Market Authority – in its capacity as the settlement and resolution authority – plays a major role in managing financial crises by isolating and appointing new departments, appointing a temporary director to manage the licensed person and his assets, restructuring the capital, and carrying out rescue operations to ensure the continuity of vital activities.

In terms of administrative penalties, the decree law stipulates raising the ceiling of administrative fines in proportion to the seriousness of the violations and the volume of transactions, allowing the Authority to impose a proportional fine of up to ten times the profit the violator has achieved or the loss he has avoided, and the possibility of reconciliation with violators before the issuance of final judicial decisions, in addition to the possibility of publishing the penalties on the official website of the Capital Market Authority, including Promotes transparency and discipline in the market.