By Andrew White
The Dubai Financial Services Authority has secured a landmark deal with the Securities Commission of Malaysia.
The Dubai Financial Services Authority (DFSA) has secured a landmark distribution deal with the Securities Commission of Malaysia (SC). The mutual recognition agreement will facilitate the cross-border distribution of Islamic investment products, and is the first such agreement entered into by both regulators.
"The DFSA is delighted that, as a result of this joint initiative, DIFC domestic Funds will be the first foreign funds permitted to be sold into Malaysia," said David David Knott, Chief Executive of the DFSA. "This arrangement is a positive step for both jurisdictions, and is intended to facilitate the cross-border flow of Islamic capital market products, as envisaged when this initiative was first announced in August 2006."
The agreement was signed by Dato' Zarinah Anwar, Chairman of the SC, and Knott, at a ceremony in Kuala Lumpur. "The DFSA is committed to assisting both the Dubai International Financial Centre (DIFC) and the Dubai International Financial Exchange (DIFX) in their objective to promote innovation and growth of Islamic capital markets in the Middle East," added Knott.
Under the mutual recognition framework, Islamic funds that have been approved by the SC may be marketed and distributed in the DIFC with minimal regulatory intervention, following the entry of Malaysia on to the DFSA's list of Recognised Jurisdictions.
Similarly, Islamic funds which have been registered or notified with the DFSA will have access to Malaysian investors. Supported by a bilateral memorandum of understanding, both regulators will work closely in the areas of supervision and enforcement of securities laws to ensure adequate protection for investors.
"By entering into a mutual recognition arrangement with the DFSA, it demonstrates our mutual intention to accelerate the growth of our respective investment management industries through the trading in each other's markets of mutually recognised investment products that are acceptable to both authorities," said Dato' Zarinah.
"The mutual recognition framework will provide many benefits to market participants including lower regulatory cost as well as an enlarged investor base," he continued. "It will also provide investors in each jurisdiction with greater choice of Islamic investment products. This arrangement with the DFSA is also in line with the Malaysia's aspiration to evolve its role as an international Islamic financial centre."For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.