SPEAKER_00 0:00

The United Arab Emirates has long aspired to establish itself as a leading international financial center. This ambition is given concrete legislative effect through Federal Decree Law No. 32 of 2025 concerning the Capital Market Authority, CMA Law, and Federal Decree Law No. 33 of 2025 concerning the regulation of the capital market, capital market, regulation law, both effective from 1st of January 2026. Together, these laws repeal the framework established under Federal Law No. 4 of 2000 and introduce a modernized regulatory regime that expands the regulators' jurisdiction, strengthens supervisory powers, and heightens compliance obligations for market participants. These reforms coincide with significant developments in the region's financial markets, including increased listings, the growth of virtual asset activity, and intensified cross-border capital flows. Viewed in this context, the new legislation represents a deliberate alignment of the UAE's capital markets governance with international best practice, adapted to the country's federal and free zone system. Institutional Reconstitution. The Capital Market Authority. The CMA law reconstitutes the Securities and Commodities Authority, SCA, as the Capital Market Authority, CMA. A federal public authority with legal personality and full financial, administrative, executive, and regulatory independence, operating under cabinet supervision. The CMA is designated as the legal successor to the SCA, inheriting all of its rights, obligations, and contractual arrangements. The new governance framework centers on a board of directors of at least seven members appointed for renewable three-year terms, subject to strict eligibility and conflict of interest requirements. The board is vested with wide regulatory and supervisory powers. The CMA's statutory objectives extend beyond oversight to include strengthening the UAE's international financial standing, enhancing competitiveness in global capital markets, and promoting fair competition, reflecting a broader strategy to attract international capital and institutional investors. Scope and jurisdictional reach under the Capital Market Regulation Law. The Capital Market Regulation Law establishes the substantive regulatory framework. Its scope of application is expansive. The law applies to financial products dealt with within the UAE, financial activities practiced within the UAE or by any person in a free zone, licensed and accredited persons, issuers, and foreign issuers operating within the UAE. And, critically, any person targeting clients within the UAE, even if their activity is conducted outside the UAE or from a financial free zone. This extraterritorial dimension represents perhaps the most consequential development in the new framework. Under the previous regime, entities operating remotely in the UAE market could plausibly argue that they fell outside the regulatory perimeter. While this does not represent a complete departure from previous cross-border practices that were tolerated, the legislative change warrants careful consideration. Firms conducting cross-border activities connected to the UAE should reassess their position from a risk management perspective, taking into account any implementing regulations to be issued by the CMA. Regulated financial activities and licensing. Article 3 of the Capital Market Regulation law enumerates 23 distinct financial activities subject to the CMA's regulation, licensing, supervision, and oversight. These range from traditional activities such as brokerage, portfolio management, underwriting, and custodian services, to categories including activities related to the establishment and management of investment funds, credit ratings, activities and services related to portfolio management, and the management of profit-sharing investment accounts. No person may engage in any such financial activity within the UAE without obtaining a license or approval from the CMA. In a notable innovation, the law introduces a formal license transfer mechanism permitting a licensed person to transfer their financial activity license to another person, subject to conditions set by the CMA, a provision that could facilitate market consolidation, restructuring, and orderly succession planning. Board and executive appointments at licensed entities now require prior CMA approval, and the CMA retains the power to reject nominations or renewals through a reasoned decision. Licensed persons face comprehensive ongoing obligations, including continuous compliance with licensing conditions, segregation and protection of client assets, notification of close links, and adherence to anti-money laundering requirements, supervision, early intervention, and resolution, the supervisory and enforcement architecture established by the Capital Market Regulation law represents a marked strengthening of the CMA's operational capabilities. The CMA may conduct periodic or ad hoc inspections, appoint temporary managers where solvency or prudential concerns arise, and exercise a range of early intervention measures designed to address financial distress before it escalates into systemic risk. For firms designated as systemically important, the CMA now holds comprehensive resolution and liquidation powers that rival those found in mature financial regulatory systems. These include the dismissal and appointment of senior management, the transfer or sale of assets and liabilities to solvent third parties, the cancellation or modification of shareholder rights, the establishment of bridge entities, the imposition of moratoria on payments to unsecured creditors, and the temporary suspension of early termination rights under derivatives and other contracts. A formal creditor hierarchy is established with secured creditors, employment claims, and resolution costs ranking ahead of client and beneficiary claims, followed by general creditors and, finally, partners and shareholders. Foreign issuers and disclosure obligations. The obligations imposed on foreign issuers have been materially strengthened. Even where financial instruments are unlisted, foreign issuers must submit documents, data, and financial reports to the CMA, comply with disclosure regimes covering material information and rumors, and ensure that required disclosures are clear, compliant with regulations, and reflective of the facts they represent. Issuers are prohibited from providing misleading or false information, and the CMA may suspend issuances where it identifies potential violations or harm to investors. This places foreign issuers under a level of regulatory scrutiny considerably more demanding than that which prevailed under the former SCA regime and reflects a broader policy objective of protecting UAE-based investors, regardless of where the issuer is domiciled. Virtual assets and Sharia compliant activities. The new framework confirms the incorporation of virtual assets within the CMA's regulatory perimeter. Trading of virtual assets within the UAE is prohibited unless the asset is included in an official list operated by a licensed platform approved by the CMA, and the asset is registered with the CMA. The CMA exercises oversight and supervision of virtual asset activities, transactions, and trading within the UAE and in free zones. Due to an exiting arrangement between the CMA and the Virtual Assets Regulator based in Dubai, such activities are currently regulated by the Dubai Virtual Asset Regulatory Authority. The legislation also provides a formal framework for financial activities and products compliant with Islamic Sharia principles. Persons under the CMA supervision may engage in sharia compliant activities, subject to the rules and standards established by the higher Sharia Authority, with requirements for internal sharia supervisory committees and exemptions from certain registration costs for transactions undertaken as part of compliant operations. Enforcement and penalties. The enforcement regime is robust. Administrative penalties available to the CMA include fines of up to 200 million UAE DRAMs per violation, or up to 10 times the profit gained or loss avoided by the violator. Criminal penalties include imprisonment for a period of not less than one year and fines of up to 250 million UAE DRAMs for serious offenses such as market manipulation and insider trading. The CMA's enforcement powers continue for three years after license revocation or cessation of activities, ensuring that historical misconduct remains within reach. An internal grievance committee provides a mechanism for challenging administrative decisions with a 30-day window for filing grievances and the possibility of suspending implementation, pending review. The law also introduces formal whistleblower protections, including immunity from criminal, civil, and contractual liability for persons reporting suspected violations. Implications for market participants. It should be noted that the capital market regulation law contains numerous additional provisions beyond those addressed in this article. These include detailed rules governing market competencies and trading mechanisms, central clearing and depository functions, the establishment of an investor protection fund, a settlement guarantee fund, requirements for public registers of licensed persons and accredited individuals, amicable settlement procedures, and comprehensive criminal offense provisions. Due to the scope of this article, only the most significant regulatory developments have been highlighted. How Altamimi and Company can assist. Altamimi and Company's banking and finance team has extensive experience advising financial institutions, fund managers, issuers, and market intermediaries on UAE capital markets regulation. The firm is well positioned to support clients in transitioning to the new CMA framework, including assessing jurisdictional scope, advising on licensing and approvals, reviewing governance and board appointment requirements, strengthening compliance and disclosure frameworks, and engaging with the CMA. With the one year transitional period now in effect, timely legal advice will be critical for market participants seeking to align their operations with the new regulatory requirements.