9 February 2017
The Promotion and Introduction Regulations (PIRs) recently approved by the Securities and Commodities Authority (SCA) fill a gap in the UAE regulatory landscape by regulating the promotion of securities and related introduction and referral activities.
The new regime alters some long-standing tolerated practices, particularly in the area of cross-border marketing of securities, and provides greater investor protection for non-institutional UAE investors.
The PIRs introduce a prohibition on the promotion of financial products to UAE retail investors unless the promoter is licensed by the SCA. SCA and foreign regulated firms must also obtain approval from the SCA before engaging in introduction and referral activities.
However, the PIRs contain a number of important exclusions which would apply to "private placements" made to institutional investors, and increase the number of available exclusions for the marketing of foreign funds. A promoter licensed by the SCA under the PIRs needs only provide a simple notification to the SCA when promoting financial products (other than foreign funds) in the UAE. However, the SCA has to approve the promotion of foreign funds.