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Tue 30 Jun 2015 01:47 PM

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Abu Dhabi free zone publishes draft rules for financial firms

Long awaited legal framework to govern financial services firms in Abu Dhabi Global Market follows enforcement of first set of rules earlier this month

Abu Dhabi free zone publishes draft rules for financial firms

A draft set of regulations to govern financial services firms in Abu
Dhabi’s new financial free zone has been published for consultation.

The first set of regulations, aimed at governing non-financial companies
setting up in the Al Maryah Island home of the new Abu Dhabi Global Market
(ADGM), came into force on June 15.

The free zone announced it had begun accepting licence applications from
companies in the retail, food and beverage and office services and supplies
sectors.

However, the rules and regulations governing financial services firms
are more complicated and have taken longer to draw up.

The draft legislation
published on Tuesday covers a variety of areas, including regulated financial
services and market activities; management and/or marketing of funds and
investment offerings, and mandatory disclosure requirements to safeguard the
interests of the marketplace.

It also sets out details of
the free zone’s market infrastructure system, market conduct rules and
disciplinary actions and enforcement powers.

In a statement, ADGM said it
will publish further consultation papers over the coming weeks that will be
“supplementary” to the draft financial services regulations and rules published
today. These will include specific rules regarding insurance, it said.

The draft legislative
framework was published following a detailed review by ADGM’s expert panel,
which comprises representatives from more than 25 of the world’s top financial
institutions.

The aim was to provide a well
regulated and internationally recognised business-friendly legal environment in
which firms can operate.

The six-week consultation
period ends on August 11 and the free zone is expected to launch later this
year,
at which point finance, law, accounting and consulting companies will be
invited to apply for licences.

Licence fees for the first set of applicants ranged from $300 to
“establish a presence” to $4,000 to obtain a commercial licence. A business
activity fee, covering up to 10 different activities, costs $4,000.

It is not yet known how much financial services firms will have to pay
to obtain a licence.

In its initial announcement
of its plan for the ADGM in 2013, the Abu Dhabi government said the zone would
host various types of bank, foreign exchange and commodity trading firms,
brokerages, pension and investment funds, Islamic financial firms and many
others. It also said the zone would fill a gap in the global trading day
between Tokyo and London.

ADGM chairman Ahmed Ali Al Sayegh
said: “The publication of Abu Dhabi Global Market’s draft financial services
legislation is a major milestone on the road to establishing ADGM as an
International Financial Centre.” 

And Richard Teng, chief
executive of ADGM’s Financial Services Regulatory Authority, said: “An
enduring financial market is well anchored by a fair, efficient and transparent
regulatory framework that is responsive to the needs of its market as well as
the developments in the global regulatory environment.

“Our regulatory approach
adopts a calibrated balance of maintaining rigour in regulation while nurturing
financial competition and innovation.”

The consultation paper can be
found here
.

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