Other BriefingsUAE Capital Markets Overhaul: A Modern Framework for Investor Protection and Market Growth
The UAE new federal capital markets framework marks a decisive shift toward stronger, centralized regulation, expanding oversight to cross-border and modern financial activities while significantly enhancing investor protection. By empowering the Capital Market Authority with broader supervisory and enforcement powers, the reforms aim to improve transparency, governance, and confidence in the UAE’s capital markets.
The reforms are embodied in Federal Decree-Law No. 32 of 2025 on the Capital Market Authority (hereinafter, Decree 32) and Federal Decree-Law No. 33 of 2025 concerning the Regulation of the Capital Market (hereinafter, Decree 33), which together replace the long-standing Securities and Commodities Authority (SCA) framework with a broader, more assertive federal regime.
These reforms arrive amid sustained growth in UAE’s capital markets (including equity and debt issuance, increasing foreign investor interest, and deeper regional linkages) and reflect a policy priority to bolster market integrity, investor confidence, and regulatory clarity. The new legal architecture not only strengthens supervision and enforcement, but also expands the regulatory perimeter to capture evolving financial products and cross-border activity.
From SCA to CMA: Institutional and legal transformation
At the centre of the reforms is the Capital Market Authority (CMA), now established as an independent federal public authority charged with regulating, supervising, and developing the UAE’s capital markets. Under the new regime, the CMA succeeds the former SCA in all rights, obligations, contracts, and legal continuity. This transition is not merely nominal: it reflects a deliberate move to elevate the quality and scope of capital markets supervision in line with global regulatory peers.
While the SCA’s mandate historically focused on traditional equity and debt securities, the CMA’s mandate is structured to deal with modern capital markets conditions, including complex financial products, cross-border investor participation, and sophisticated institutional operations. The law embeds the CMA with statutory objectives such as ensuring market integrity, protecting investors, promoting fair competition, and advancing the UAE’s international competitiveness as a financial centre.
Decree 32 and 33 fully repeal the previous framework under Federal Law No. 4 of 2000 and any conflicting provisions, marking a definitive legislative reset.
Expanded regulatory scope and cross-border reach
One of the most important changes in the new regime is the expansion of the regulatory perimeter. The Capital Markets Law adopts a broad definition of regulated activities and expressly extends the CMA’s reach to certain foreign entities and activities that target onshore UAE investors, even if those activities are conducted outside the UAE or within financial free zones such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).
Under the previous framework, regulatory reach was often tied to domestic execution and physical presence. By contrast, the new laws clarify that cross-border offerings, marketing, solicitation, and investment services directed at UAE clients fall within the federal regulatory perimeter, irrespective of where execution occurs. This approach seeks to prevent regulatory arbitrage and ensure that investor protections apply consistently, particularly as digital and cross-border finance grows in importance.
Activities carried out exclusively within financial free zones remain subject to free-zone regulators (DFSA in DIFC, FSRA in ADGM). However, any engagement with onshore investors or capital markets can trigger federal requirements. This distinction is crucial for firms that operate across jurisdictions and serve mixed client bases.
Modernizing market practices and standards
Statutory prospectus and disclosure regime
The new framework introduces a unified statutory prospectus liability regime applicable to all issuers. Under this regime, responsibility for the accuracy, completeness, and truthfulness of offering documents falls squarely on issuers’ boards, senior management, and advisers. These parties can face civil and even criminal penalties, including imprisonment and substantial fines, for materially misleading statements or deliberate omissions in offering materials.
This represents a shift from earlier practice, where liability standards were often derived from exchange rules and regulatory guidance. By embedding liability provisions directly in statute, the regime enhances certainty and accountability, which is fundamental for investor confidence and for attracting sophisticated institutional capital.
Price stabilization safe harbor
Another novel feature recognised in the new law is an express statutory “price stabilization safe harbor” for post-IPO market activity. Price stabilization (whereby market makers or underwriters support secondary market prices for a short period post-issuance) has been widely accepted in international capital markets but lacked explicit statutory backing in the UAE. The federal rules now codify this practice, offering greater legal certainty for underwriting and trading strategies that support orderly markets.
Market abuse, insider trading, and conduct standards
The reforms also strengthen market conduct standards, including tighter prohibitions on market abuse, insider trading, and unlawful disclosure of inside information. Although such controls existed previously, the new regime embeds them in federal statute with clearer definitions, enforcement pathways, and penalties, aligning the UAE more closely with international securities law practice.
Investor protection and safeguarding mechanisms
Investor protection is a central theme of the new framework. In addition to disclosure and conduct standards, the law empowers the CMA to establish dedicated investor protection funds and settlement guarantee funds, offering additional safeguards in cases such as broker failure, systemic stress, or settlement shortfalls. These mechanisms are intended to enhance confidence, particularly for retail and less sophisticated investors, and are a significant step toward greater systemic resilience.
Governance, licensing, and systemic oversight
Fit-and-proper requirements
The CMA now has explicit authority to assess the fitness and propriety of board members, senior executives, and key decision-makers at regulated firms. This includes imposing standards on corporate governance, conflict-of-interest identification and management, and ongoing suitability for roles with material influence over investor assets or market outcomes.
Designation of systemically important firms
The law also allows the CMA to designate “persons of regulatory importance”: entities whose size, interconnectedness, or market impact warrant enhanced oversight, early intervention planning, and recovery strategies. These designations improve the regulator’s ability to monitor systemic risk and act proactively to prevent market stress from cascading into broader financial instability.
Early intervention and crisis management
Supporting systemic oversight, the CMA has new powers to intervene early when licensed entities show signs of financial distress or operational stress. These powers include requiring firms to implement recovery plans, increase capital or liquidity buffers, restructure, appoint temporary management, and, in extreme cases, oversee orderly resolution or exit strategies. This early intervention regime brings the UAE closer to international practices seen in advanced capital markets regulators, where preventing failures is as important as punishing misconduct.
Enforcement powers and international alignment
Enhanced penalties
The CMA’s enforcement toolkit has been significantly enhanced under the new regime. Administrative sanctions can now be proportionate and dissuasive, including fines of up to ten times the profit realised or loss avoided through misconduct. The authority can also publish sanctions to promote transparency and deterrence, and may initiate conciliation processes before criminal proceedings in appropriate cases.
Cooperation and cross-border recognition
The federal laws emphasise international cooperation with foreign regulators, including mutual recognition of regulatory actions and information sharing. This is especially important for cross-border capital flows and for international issuers seeking to access UAE markets, as it reduces regulatory friction and supports global investor confidence.
Implementation timeline and transitional issues
The new framework came into force on January 1, 2026, but market participants have a transition period, typically until January 1, 2027, to comply fully with the updated licensing and operational requirements, subject to extensions granted by the CMA. During this period, existing Cabinet decisions and SCA resolutions remain effective to the extent they do not conflict with the new laws.
Because many investor-facing protections and operational rules will be developed through implementing regulations, firms must closely monitor rulemaking updates. Areas such as client asset protections, financial promotions, segregation of assets, and specific conduct standards will be clarified progressively, shaping how the regime operates in practice.
Strategic implications for investors and market participants
Greater certainty and transparency
For investors (both domestic and international) the new regime provides clearer standards of disclosure, conduct, and enforcement. A statutory prospectus liability regime and strengthened market abuse controls reduce ambiguity and align the UAE with international investor protection norms.
Broader Capital Market Participation
The expanded regulatory perimeter and clarifications around cross-border offerings and marketing broaden participation opportunities in UAE capital markets, while ensuring that investor protections travel with activities targeting UAE investors.
Compliance and risk management
For issuers, intermediaries, and licensed firms, the reforms heighten compliance expectations and require robust governance, risk management, and disclosure frameworks. Firms that proactively adapt to the new regime (including cross-jurisdictional compliance programmes and early alignment with CMA expectations) will be better positioned for sustainable growth.
Conclusion
The UAE’s capital markets reforms represent a meaningful regulatory reset, shifting from a legacy framework to a statute-driven, investor-centric regime designed for the modern era. By elevating the role of the CMA, expanding regulatory reach, strengthening investor protections, and aligning with global standards, the UAE has positioned its capital markets for deeper integration with international financial systems.
While much practical detail will emerge via implementing regulations, the direction of reform is clear: greater transparency, stronger governance, proactive supervision, and higher standards of investor protection. For companies, investors, and intermediaries engaged in the UAE’s capital markets, these changes signal both opportunity and responsibility, and set a foundation for more resilient, trusted, and internationally competitive markets.
Dezan Shira & Associates supports domestic and foreign investors operating in the UAE with legal, regulatory, and compliance advisory services across capital markets, financial regulation, and corporate governance. For further information on how the new federal capital markets framework may affect your business or investment activities, please contact our team here.
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Middle East Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Dubai (UAE). Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China (including the Hong Kong SAR), Indonesia, Singapore, Malaysia, Mongolia, Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.
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