The Financial Services Regulatory Authority (FSRA), the market watchdog of Abu Dhabi Global Markets of the United Arab Emirates (UAE), has outlined five “guiding principles” that will inform its regulatory efforts.
The ADGM is one of the international financial centers and free trade zones in the UAE.
According to the FSRA, the principles are anchored on ensuring that ADGM’s regulatory frameworks are internationally recognized, market-oriented, risk-focused, accommodate regional and global cooperation, and deliver high standards of quality and service.
FSRA outlined and explained the rationale behind these principles in undated post published on the official website of the ADGM.
The First Two Principles
The first principle aims to bring international recognition to the regulatory framework of ADGM.
FSRA explained that “ADGM will use best standards and practices from international financial service centers around the world.”
According to this principle, the free trade zone will also confirm to international standards in Anti-Money Laundering and Anti-Terrorist Financing.
At the same time, the free zone will also enshrine regulatory confidentiality except in cases where the disclosure of corporate information is required by other regulators, public authorities or the court.
The second principle aims to make the rules and regulations of the free trade zone dynamic and market oriented.
FRSA explained that ADGM’s regulatory framework will be principle-based and results-focused, proportionate and progressive, responsive and proactive to industry changes and needs, and will also create space for regular dialogue with the industry.
“The ADGM legislative framework will be based on English Common Law, enabling the courts to draw on a well-established set of precedents and respond effectively to changing global market conditions,” FSRA said.
“This will also empower ADGM to offer its member institutions the same level of sophistication, certainty and flexibility in its legal and regulatory regime as practiced in other international financial jurisdictions,” it added.
The Other Three Principles
Under the third principle, ADGM must adopt a “prudent regulatory approach” to monitor the financial stability and business friendliness of the Abu Dhabi free trade zone.
In addition, FSRA under this principle also wants to achieve a consolidated supervision of financial institutions in the Abu Dhabi free zone, help reduce the impact of business failure, and protect the best interest of consumers, among other goals.
Meanwhile, through the fourth principle, FSRA seeks to achieve cooperation and shared responsibility in its regulation of the ADGM.
The regulatory authority explained that it will achieve this through partnership with the global regulatory community, cooperation with market participants and recognition of local nuances and laws.
“In addition to maintaining international standards, ADGM’s legislative framework and regulations will reflect the local characteristics of the UAE and the wider Middle East region,” FSRA explained.
“Specifically, ADGM will also provide the platform for a comprehensive offering of Islamic financial services to meet the growing demand and needs of this industry,” added the market supervisor.
Additionally, the fifth principle seeks to achieve high standards of quality and service through a dedicated regulatory team with strong industry knowledge and to uphold the highest standards of integrity.
“The Regulatory Authority [FSRA] is committed to growing its regulatory workforce and will devote appropriate resources to improving the level of expertise, professionalism and ethical standards among its staff,” explained FSRA.
The Financial Services Regulatory Authority (FSRA), the market watchdog of Abu Dhabi Global Markets of the United Arab Emirates (UAE), has outlined five “guiding principles” that will inform its regulatory efforts.
The ADGM is one of the international financial centers and free trade zones in the UAE.
According to the FSRA, the principles are anchored on ensuring that ADGM’s regulatory frameworks are internationally recognized, market-oriented, risk-focused, accommodate regional and global cooperation, and deliver high standards of quality and service.
FSRA outlined and explained the rationale behind these principles in undated post published on the official website of the ADGM.
The First Two Principles
The first principle aims to bring international recognition to the regulatory framework of ADGM.
FSRA explained that “ADGM will use best standards and practices from international financial service centers around the world.”
According to this principle, the free trade zone will also confirm to international standards in Anti-Money Laundering and Anti-Terrorist Financing.
At the same time, the free zone will also enshrine regulatory confidentiality except in cases where the disclosure of corporate information is required by other regulators, public authorities or the court.
The second principle aims to make the rules and regulations of the free trade zone dynamic and market oriented.
FRSA explained that ADGM’s regulatory framework will be principle-based and results-focused, proportionate and progressive, responsive and proactive to industry changes and needs, and will also create space for regular dialogue with the industry.
“The ADGM legislative framework will be based on English Common Law, enabling the courts to draw on a well-established set of precedents and respond effectively to changing global market conditions,” FSRA said.
“This will also empower ADGM to offer its member institutions the same level of sophistication, certainty and flexibility in its legal and regulatory regime as practiced in other international financial jurisdictions,” it added.
The Other Three Principles
Under the third principle, ADGM must adopt a “prudent regulatory approach” to monitor the financial stability and business friendliness of the Abu Dhabi free trade zone.
In addition, FSRA under this principle also wants to achieve a consolidated supervision of financial institutions in the Abu Dhabi free zone, help reduce the impact of business failure, and protect the best interest of consumers, among other goals.
Meanwhile, through the fourth principle, FSRA seeks to achieve cooperation and shared responsibility in its regulation of the ADGM.
The regulatory authority explained that it will achieve this through partnership with the global regulatory community, cooperation with market participants and recognition of local nuances and laws.
“In addition to maintaining international standards, ADGM’s legislative framework and regulations will reflect the local characteristics of the UAE and the wider Middle East region,” FSRA explained.
“Specifically, ADGM will also provide the platform for a comprehensive offering of Islamic financial services to meet the growing demand and needs of this industry,” added the market supervisor.
Additionally, the fifth principle seeks to achieve high standards of quality and service through a dedicated regulatory team with strong industry knowledge and to uphold the highest standards of integrity.
“The Regulatory Authority [FSRA] is committed to growing its regulatory workforce and will devote appropriate resources to improving the level of expertise, professionalism and ethical standards among its staff,” explained FSRA.
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