The survey, most of the respondents to which were senior managers in fund companies, showed 48% of fund executives believe the new regulations – which will make it harder and more expensive for non-local funds to distribute – will damage the UAE fund industry.
Only 16% of those polled said the regulations would improve the sector, while 36% were neutral about their impact. An overwhelming 80% of those polled said they would have to change their business models to meet the new regulatory regime.
For overseas companies, this could mean only targeting certain types of investor, as well as the likelihood of at the very least needing to employ a local placement agent.
An alternative option for them would be establishing an onshore UAE presence. Questioned in more detail about the likely need to change business models, some respondents said they might also limit the range of funds they make available in order to comply with the new regime.
Respondents were also asked whether, in light of the new regulations, they would consider focusing on different distribution channels, such as offshore life offices, to sell their funds.
Ranking their responses between one and ten, with the former being “extremely unlikely” and ten “extremely likely”, 8% of those surveyed selected nine and 20% answered eight. The most common answer was six, which was given by 24% of those polled.
Almost 60% of those surveyed said the regulations favoured locally licensed institutions and 42% said they favoured domestic funds.
Nigel Sillitoe, chief executive of Insight Discovery, the research company which conducted the survey in conjunction with International Adviser, said of the findings: ‘’These findings confirm that a significant number of international asset management companies active within the UAE have some reservations about the proposed new ESCA regulations.
"We very much hope that that ESCA sounds out the feelings of asset management companies and introduce some much needed clarity, especially as so many international asset management companies in Europe are looking to develop business in MENA for the first time.’’
