DFSA continues to develop its funds regime

The Dubai Financial Services Authority, DFSA, today consulted on a comprehensive package of proposals to support the continued development of the growing funds industry in the Dubai International Financial Centre, DIFC.

The proposals are wide-ranging and are designed to provide greater flexibility for investors and fund managers in the centre.

Ian Johnston, Chief Executive of the DFSA, said, "These proposals, to enhance our funds regime, mark yet another milestone in the evolution and development of the funds industry in the DIFC. The changes reflect our ongoing commitment to maintaining international standards, while being fully aware of the need to tailor our regime to take account of DIFC specific factors and the regional requirements."

The funds industry in the DIFC has been growing steadily with 18 funds being registered so far in the current year, reinforcing the status of the centre as the largest fund hub in the region.

The DFSA aims to provide further opportunities for industry development by removing the current limits on the number of investors which a DIFC fund can have.

Currently only a public fund is able to have 101 or more investors, with an exempt fund being limited to 100 or fewer investors and a Qualified Investor Fund, QIF, to 50 or fewer investors. The proposals will not change the current approach to regulation of these funds, based on the type of investors.

The DFSA will introduce a new class of specialist funds for Exchange-Traded Funds, ETFs. These open-ended funds, listed and traded on exchanges, are popular with both retail and institutional investors in other jurisdictions. Their introduction would give fund managers greater choice of the type of funds they could offer in or from the DIFC.

A new model for internal management of an Investment Company will also be introduced, where such a company can be internally managed by its licensed sole Corporate Director. This is a model available in the European Union and the proposals introduce it with some adjustments to suit the DIFC regime.

The proposals strengthen the DFSA’s commitment to meeting international standards, particularly of the Financial Stability Board and the International Organisation of Securities Commissions, through measures to enhance liquidity risk management in open-ended funds.