The UAE’s decision to transition from the Securities and Commodities Authority (SCA) to the Capital Markets Authority (CMA) marks more than a simple rebrand, it reflects the country’s intent to evolve its regulatory architecture in line with leading global capital-markets hubs.
While the SCA mandate historically centered on supervising securities issuance, trading activity, and commodities-linked instruments, the CMA designation signals a broader remit: market development, asset-management growth, cross-border fund flows, and exchange-traded product innovation.
In effect, the regulator’s role is expanding from market overseer to ecosystem builder, particularly relevant as the UAE positions itself as a regional domicile and distribution hub for investment funds.
The Journey for ETFs
Since the early development of ETFs in the UAE, the Securities and Commodities Authority played a foundational role, prioritizing investor protection, disclosure, and product suitability across both local ETFs and foreign funds. It later established frameworks for domestic ETF listings, covering structuring, custody, and market-making but early products struggled with limited liquidity, wider spreads, and modest institutional backing. A key milestone came with the introduction of foreign ETF cross-listing, enabling globally listed funds to trade locally through recognition regimes rather than full domicile, significantly expanding access to international strategies within the UAE market.
In 2023, the Capital Markets Authority introduced a new framework for foreign funds and ETFs that reshaped the local wealth landscape. Previously, global asset managers could register funds and distribute to both institutional and retail investors via local promoters. The introduction of a AED 500,000 minimum subscription threshold unless the fund is domiciled in the UAE through a feeder fund or a local listing on the exchange. The rule is aimed at strengthening suitability protections, curtailed retail participation, slowing distribution through banks and platforms and skewing flows institutional. Coupled with detailed registration, disclosure, and local-representation requirements, the regime reinforced safeguards but also raised time and cost barriers for foreign issuers entering the UAE market.
Key Points: Marketing of Foreign Funds & ETFs in UAE Mainland
- Professional investors only (private placement):
Foreign funds can be marketed in UAE mainland to professional investors via CMA-licensed promoters after CMA registration. - Retail marketing restricted:
Direct public offering of foreign funds to retail investors in mainland UAE is not permitted. - Feeder-fund or Local Listing workaround:
Retail access may occur via a direct listing or a cross listing to one of the UAE Exchanges the Abu Dhabi Securities Exchange (ADX) or the Dubai Financial Market (DFM) or through a ADGM/DIFC feeder funds under passporting rules. - Registration process:
Foreign funds must register through an SCA legal representative and local promoter via the SCA online portal. - Lower fees & faster approvals:
Registration fees reduced (to ~AED 12K) with review timelines around five working days. - Minimum subscription threshold:
Expected unified minimum of AED 500K for foreign funds marketed to professional investors.
Upcoming Changes to ETFs?
There has been market speculation that the Capital Markets Authority (CMA) may consider reclassifying ETFs from “funds” to “securities.” Such a shift would be significant: under a securities classification, ETFs could potentially become freely accessible to retail investors without minimum subscription thresholds or foreign-fund promotion constraints, materially expanding retail participation and secondary-market activity.
However, based on discussions and inquiries across market participants, legal advisers, and capital-markets stakeholders, these developments remain speculative. Our conclusion and opinion indicates that there has been no formal indication that the CMA is actively pursuing a rule change of this nature. Regulatory amendments of this scale typically undergo extensive consultation, policy review, and legislative process before any public announcement.
At present, ETFs continue to be regulated under the fund framework. As such, retail investors can access ETFs only if they are locally listed on UAE exchanges, domiciled within local fund structures, or distributed under foreign-fund promotion rules, where the AED 500,000 minimum subscription threshold applies.
