ADGM issues public consult on regulatory framework for private financing platformsADGM FSRA 25/07/2018
Addressing the financing needs and support for startups and small-and-medium-enterprises in MENA.
Abu Dhabi Global Market (ADGM), the International Financial Centre in Abu Dhabi, today published a consultation paper setting out its proposed regulatory framework for operators of Private Financing Platforms (PFPs) in ADGM. This follows positive feedback received from the industry in response to the March discussion paper issued by the Financial Services Regulatory Authority (FSRA) on the scope and form of a regulatory framework for PFPs, which has informed the development and refinement of the proposals set out in this consultation paper. This is part of FSRA's ongoing initiatives to provide an inclusive regulatory platform that bolster the growth and development of start-ups and small- and medium-sized enterprises (SMEs) in Abu Dhabi and MENA region.
PFPs are online platforms that enable private enterprises to seek financing from private and institutional investors to launch and grow their businesses. PFPs that facilitate such business-to-business lending, equity crowdfunding, invoice financing and private placements can play an important role in improving access to alternative financing for private enterprises, start-ups and SMEs, which are key engines of economic growth and diversification in the UAE and wider region.
The FSRA is proposing a tailored, risk-proportionate regulatory framework that effectively addresses the risks posed by transactions facilitated through a PFP. The proposed features of the regulatory framework include the following:
Creation of a new Regulated Activity (Operating a Private Financing Platform) which permits both loan-based and investment-based PFP transactions;
Loans or investments may be held directly by lenders or investors or indirectly through a special purpose vehicle (SPV). The PFP Framework will be supported by the range of SPVs available in ADGM which will offer flexibility in various financing, securitisation and asset transfer options;
Participation in PFP transactions is targeted at Professional Clients given the higher risks associated with these transactions. The FSRA may allow PFP operators to serve Retail Clients, on an exceptional basis, subject to the PFP operator putting in place appropriate safeguards commensurate with the nature and scale of the PFP operator’s business.
Requirements for PFP operators, whilst retaining sufficient flexibility to accommodate innovative business models, to have appropriate systems and controls in the areas of due diligence of those enterprises listed on the PFP, disclosure, safeguarding of client assets, anti-money laundering and counter-terrorist financing (AML/CFT), amongst others.
ADGM invites the public and industry participants to submit their comments of the proposed framework and draft regulations and rules by 16 August 2018 to email@example.com. For more details of the consultation, please click on this link.
About Abu Dhabi Global Market
Abu Dhabi Global Market (ADGM), an international financial centre (IFC) located in the capital city of the United Arab Emirates, opened for business on 21 October 2015. Established by UAE Federal Decree as a broad-based financial centre, ADGM augments Abu Dhabi's position as a global hub for business and finance and serves as a strategic link between the growing economies of the Middle East, Africa and South Asia and the rest of the world.
ADGM's strategy is anchored by Abu Dhabi's key strengths including private banking, wealth management, asset management and financial innovation. Comprising three independent authorities: ADGM Courts, the Financial Services Regulatory Authority and the Registration Authority, ADGM as IFC governs the Al Maryah Island which is a designated financial free zone. It enables registered financial institutions, companies and entities to operate, innovate and success within an international regulatory framework based on Common Law. Since its inception, ADGM has been awarded the "Financial Centre of the Year (MENA)" for two consecutive years for its initiatives and contributions to the financial and capital markets industry in the region.*
For more details of ADGM, please visit www.adgm.com or follow us on Twitter : @adglobalmarket and Linkedin : ADGM
* Source : The Global Investor Middle East and North Africa (MENA) Awards
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