New UAE decree laws give sweeping powers to Capital Market Authority

To modernise the legislative and regulatory framework governing the financial sector and enhance its stability, efficiency, and competitiveness, the UAE Government has issued two federal decree laws that give sweeping powers to the Capital Market Authority (CMA) and the way the capital markets are regulated.

The new decree laws align the national regulatory ecosystem with the highest international standards. It reinforces the independence of the Capital Market Authority and its role in safeguarding the stability of the capital markets sector. It will also improve investor protection.

The laws define the core mandates of the CMA, which is regulating licensed financial activities and issuers, supervising and overseeing them in accordance with international standards, issuing regulations and standards to ensure fair and effective financial practices, monitoring and analysing system-related risks.

UAE modernises capital markets regulation

The law introduces proactive early intervention measures to address indicators that point to deterioration in the financial position of licensed institutions.

These measures include activating recovery plans, imposing additional capital and liquidity requirements, adjusting strategies and administrative and operational structures, appointing temporary committees or placing licensed firms under direct administration. Extreme measures could include merger, acquisition, or liquidation of the defaulting firm.

The CMA, in its capacity as the resolution authority, will play a central role in managing financial crises through the dismissal and appointment of management, the appointment of a temporary administrator to manage the licensed organisation and its assets, capital restructuring, and the implementation of rescue measures to ensure the continuity of critical activities.

The decree laws also provide for raising administrative fines in proportion to the gravity of violations and the size of transactions. The CMA will now be able to impose proportional fines of up to ten times the profit realised by the violator or 10 times the value of the loss avoided.

The laws bring the UAE’s financial regulations compliant with organisations such as the International Organisation of Securities Commissions, the World Bank, the International Monetary Fund and the Financial Action Task Force. They also support enhanced international cooperation, facilitate mutual recognition procedures, and enable the recognition of financial products across jurisdictions.