Regulators look to balance investor protection and freedom

30 April 2014

Regulators may adopt similar model to Dubai for private placements, says lawyer

Regional regulators are increasing recognising the different levels of sophistication among investors, says Muneer Khan, partner at law firm Simmons & Simmons Middle East.

“We’ve had a request from a regulator in the region that is looking into exempting private placements,” he says, adding that they are looking to a model similar to that of Dubai.

The UAE’s Securities & Commodities Authority introduced regulation in May 2013 exempting qualified investors from needing to register and licence their private placements. The amendment sets out three categories of investors: government-owned funds; institutional investors specialised in securities; and locally licensed investment managers in the UAE. The exemption attracted international institutional investors back to the market and caused deal volumes to take off again, according to Khan.

Saudi Arabia, Dubai International Financial Centre and Qatar Financial Centre are the only other markets in the region that distinguish between different types of investors in their regulatory oversight.

“The hope is this will result in a balance between investor protection and the freedom for sophisticated institutional investors to make their own choices, as opposed to impinging on their strategies,” says Khan. “I think in one to two years, we’ll see more evidence of a better balance.”

He added that the Dubai Financial Services Authority plans to introduce a new fund category, the qualified investor exempt fund, which will be less tightly regulated and more suitable for sophisticated institutional investors.

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