Other BriefingsUAE Unveils Sweeping Capital Markets Reform with Two New Federal Decree Laws
By aligning its capital markets regulatory framework with global best practices, the UAE is positioning itself to compete more effectively with established international financial centers, including London, Singapore, and Hong Kong.
The United Arab Emirates has issued two new federal decree laws aimed at strengthening the regulation, stability, and international competitiveness of its capital markets, as part of ongoing efforts to modernize financial legislation and reinforce the resilience of its financial oversight architecture.
Issued on January 1, the decree laws relate to:
- the Capital Market Authority (CMA); and
- the Regulation of Capital Markets.
They are designed to reinforce the CMA’s institutional independence, expand its supervisory mandate, strengthen early-intervention and recovery powers, and align the UAE’s capital markets framework with leading international regulatory standards. The reforms support the UAE’s broader strategy to enhance financial stability, improve market transparency, and consolidate the country’s role as a globally competitive financial hub.
Strengthening the UAE Capital Market Authority’s Independence and Alignment with Global Standards
Government authorities stated that the new framework is intended to support “the soundness and stability of the capital markets sector,” ensure fair competition, improve the UAE’s performance in international regulatory assessments, and elevate the maturity of its capital markets ecosystem.
The decree laws formally define the CMA’s core supervisory functions, including:
- regulating and supervising licensed financial activities and issuers
- issuing rules to promote fair, efficient, and transparent market practices
- supporting governance and risk-management principles
- monitoring system-wide risks across the capital markets sector
In parallel, the reforms align regulatory practices with standards set by:
- the International Organisation of Securities Commissions (IOSCO)
- the World Bank
- the International Monetary Fund (IMF)
- the Financial Action Task Force (FATF)
This alignment is expected to strengthen cross-border regulatory cooperation, support international benchmarking, and enhance investor confidence in UAE financial markets.
Key features of the new regulatory framework
- Boosting oversight and independence of the CMA
The decree laws clearly articulate the CMA’s supervisory mandate and reinforce its authority to:
- regulate and oversee licensed market participants and financial activities
- enforce market integrity and transparency standards
- ensure fair competition and orderly market conduct
- identify and mitigate systemic risk exposures
The CMA’s strengthened institutional independence is intended to enhance regulatory credibility, improve supervisory consistency, and support long-term market stability.
- Global alignment and cross-border financial product recognition
A central objective of the reforms is to further align the UAE’s capital markets framework with global best practices and international compliance norms.
The decree laws provide for:
- enhanced international regulatory cooperation
- streamlined mutual recognition mechanisms
- cross-border recognition of financial products
This framework is expected to facilitate international capital flows, support greater foreign issuer participation, and strengthen the UAE’s profile as an interconnected and outward-looking financial market jurisdiction.
- Consumer protection, financial inclusion, and responsible finance
Beyond institutional supervision, the reforms introduce an integrated framework aimed at enhancing:
- consumer protection
- financial inclusion
- sustainability in financial services
Licensed firms are required to ensure appropriate and inclusive access to financial services across all segments of society, in line with the UAE’s ongoing digital transformation and expansion of financial technology solutions.
The decree laws also reinforce responsible lending and retail-finance safeguards, including:
- aligning credit facilities with customers’ income levels
- preventing irresponsible or high-risk financial practices
- strengthening financial literacy through national awareness programs
These measures are expected to support financial resilience at both institutional and consumer levels.
- Early intervention and crisis management powers
A major component of the reforms is the introduction of a more proactive and structured approach to managing financial stress among licensed entities.
The new framework empowers regulators to deploy early intervention tools, including:
- activation of recovery and resolution plans
- imposition of additional capital and liquidity requirements
- strategic, operational, or managerial restructuring
- appointment of temporary administrators or oversight committees
- direct administration of firms where necessary
Where warranted, regulators may also pursue:
- mergers
- acquisitions
- restructuring or liquidation
to safeguard clients and preserve broader financial stability.
- Enhanced penalties, transparency, and enforcement discipline
The decree laws also update the administrative penalties framework, allowing the CMA to impose fines that are:
- proportionate to the severity of breaches
- reflective of the size and impact of underlying transactions
Penalties may reach up to 10-times the profits gained or losses avoided through a violation.
The framework further provides for:
- reconciliation procedures prior to final judicial rulings
- public disclosure of sanctions on the CMA’s official platform
These measures are designed to reinforce transparency, strengthen market discipline, and deter misconduct.
CMA’s dual role: Supervisory authority and resolution authority
A defining feature of the new decree laws is the formal clarification of the CMA’s dual institutional role in the UAE capital markets framework.
Under the new legislation, the CMA acts as:
- Supervisory Authority — responsible for:
- market regulation and oversight
- licensing and supervision of financial activities
- enforcement of governance and conduct standards
- systemic risk monitoring
- Resolution Authority — responsible for:
- managing financial distress and crisis scenarios
- dismissing or appointing senior management where required
- restructuring capital and operational frameworks
- ensuring continuity of critical market functions
This dual-role structure aligns the UAE with international financial-stability models used in advanced regulatory jurisdictions, enabling more coordinated supervisory action and faster decision-making during periods of market disruption.
By consolidating supervisory and resolution responsibilities within a single, empowered authority, the reforms are expected to:
- reduce fragmentation in crisis-response processes
- strengthen institutional accountability
- improve regulatory readiness to handle market shocks
Context: Part of broader financial sector reforms
The capital markets reform package follows a series of significant financial-sector policy and supervisory initiatives in the UAE, including the introduction of a strengthened banking law framework in 2025 that enhanced the enforcement and early-intervention powers of the Central Bank of the UAE (CBUAE). Collectively, these developments reflect a sustained policy direction toward:
- risk-based supervision
- stronger prudential safeguards
- improved governance standards
- enhanced crisis-management capabilities
They also support the UAE’s strategy to develop a stable, efficient, innovation-friendly, and internationally aligned financial ecosystem.
Market and investor impact
Market participants and legal analysts note that the new decree laws are expected to:
- increase regulatory clarity and predictability
- improve investor confidence and market integrity
- strengthen risk-management and compliance practices
- provide clearer mechanisms for crisis-response and resolution
By embedding supervisory and resolution functions within a unified, empowered authority, the UAE is positioning its capital markets framework to operate with greater resilience and competitiveness on the global stage.
The implementation of the reforms is likely to influence:
- corporate governance structures
- capital planning and liquidity management
- internal risk-control frameworks
- cross-border investment and financing strategies
for firms operating in — or investing into — the UAE.
Looking ahead, the new decree laws are expected to shape capital markets activity throughout 2026 and beyond, as the UAE continues advancing toward a more mature, globally integrated financial-sector regulatory environment.
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