Under new SCA regulations governing mutual funds, which technically came into force in August 2016, only one major fund house, Goldman Sachs Asset Management, has so far registered a range of foreign funds. These included equity, fixed income, multi asset and alternative investment products.
Most other funds, especially those previously registered in the UAE, are continuing to be promoted under the old system, while the asset managers and the existing promoters await clarity on how the new process will work. However, some funds have applied for re-registration and just not yet heard back from the regulator.
New process
The new SCA regulations require an asset manager to register a foreign mutual fund for sale in the UAE rather than a local promoter registering the fund as previously happened.
When a fund is registered under the new system, the asset manager can then notify the SCA of its appointment of any number of local promoters for the fund that it has established through distribution agreements.
One benefit of this system is that an asset manager can submit any number of local promoters of its funds and there is no additional fee, which replaces a system in which each promoter had to register the fund and pay a fee.
The new fees are purely on the funds being registered and are around AED35,000 (£7,658, $9,527, €8,986) initially per fund, with an annual registration or renewal charge of AED7,500.
Promoter’s license
Virtually at the same time the SCA introduced the new mutual fund registration system, it also unveiled a new fund promoter’s licence, which covers firms selling mutual funds. The rules surrounding these new licences are also currently awaiting clarification.
Guidance notes from the SCA on how the new rules will be applied, and on the time limits asset managers and promoters have to comply are expected at any time.
There is also an outstanding issue of funds offered via insurance-linked products by life companies, which also now have to be registered by the SCA.
“We hope to have further clarity on a number of issues soon, including on three key issues in particular,” said Muneer Khan, a partner at international law firm Simmons & Simmons based in Dubai.
“One is the treatment of insurance-wrapped products and whether there are any transitionary arrangements in relation to these products. Two is the position in relation to previously registered funds and, three, is the transitionary arrangements for previously approved local promoters,” he said.
Registration rush
“Once we have clarity on these and other issues, which we understand will be provided through the issuance of regulatory circulars, we could see a rush of new fund registrations and re-registrations,” he added.
Khan he could see a bigger and more thriving international funds market developing in the UAE once the rules and procedures are developed and clarified.
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