From July 5th the DFSA’s new Markets Law comes into effect and will have a far reaching impact on the financial markets in and around Dubai International Financial Centre (DIFC), according to DLA Piper, the global law firm. The new law is in line with the DFSA’s drive to adopt best practice from around the world, however the markets need to be aware of the impact of the changes.
The new law further aligns the primary and secondary markets in the UAE with those in Europe, and therefore should not pose a problem for those with experience in the EU and the UK. However, a lot will depend on the implementation of underlying procedures. In the past, notably in relation to the interaction between Nasdaq Dubai and the DFSA, there has been confusion on both the applicable standards as well as the responsible authority, and care must be taken to ensure the lessons have been learnt and a similar situation does not appear.
“As a former DFSA regulator I’ve seen a number of changes within the organisation and welcome the new Markets Law,” commented Aryan Schoorl, Legal Director, DLA Piper Middle East. “The regulatory changes allow the DFSA to attract additional market participants trading in and from the DIFC and this should be an incentive for more vibrant and liquid markets in the DIFC. Notably the stock exchange, which has faced difficulties in relation to generating critical mass in terms of listed stocks, market participants and the resulting liquidity.”
Over the last few years regulators around the world have witnessed an onslaught of new standards, notably post financial crisis, andthe latest changes ensures the DFSA keeps up with wider changes in the market. That in itself is a good thing and many market participants are comfortable with this tactic as it ensures a well regulated market place, however as the DIFC is an international market place it must also ensure against duplication of standards.
“The DIFC welcomes participants from all over the world and so we hope the DFSA factors in the requisite flexibility to ensure that there is no unnecessary duplication of standards,” continued Schoorl. “The DFSA does have that tool, in the form of waivers and modifications, however it needs to ensure that it uses those tools in a responsible and predictable way. What we hope to see over the coming year is the DIFC actively promoting market participation from the neighbouring GCC trading, investor and issuer communities as this would make a fundamental impact on the sustainability of the DIFC market.”