The Financial Services Regulatory Authority (“FSRA”) and Registration Authority (“RA”) of Abu Dhabi Global Market (“ADGM”) (collectively, the “Relevant Authorities”) remind all operating entities in ADGM (“ADGM Entities”) to ensure appropriate communication and accurate use of terms when promoting their status as being regulated or licensed in the ADGM.
The Relevant Authorities have noted instances of ADGM Entities holding themselves out as offering services or products that are “ADGM regulated” without proper context. This may be misleading to the public on the nature and extent of regulation that the Relevant Authorities exercise over the activities of ADGM Entities.
In ADGM, any business that wishes to establish operations in the financial centre is required to apply for registration and commercial licensing with the RA under the applicable commercial regulations. In addition to registration and commercial licensing with the RA, if a business wishes to carry on financial services activities in ADGM, it must also have financial services permission from the FSRA under the applicable financial services regulations. An ADGM Entity that holds a financial services permission (“Financial Services Entity”) is therefore subject to both financial services regulations and commercial regulations, as opposed to a non-Financial Services Entity that is subject only to commercial regulations.
Distinct regulatory frameworks
Financial services regulation and commercial regulation involve distinct types of regulatory frameworks that govern different aspects of business activities. In general, a reference to a firm or activity being regulated in the financial sector means that it is subject to a set of regulations, rules and oversight designed to ensure fair and transparent market practices, protect investors, maintain financial stability, and promote integrity and efficiency of financial systems.
Ongoing supervision
At the FSRA, the ongoing supervision of a Financial Services Entity follows a methodology that is in line with best practices and principles set out by international regulatory standard-setting bodies. This includes periodic reviews and onsite inspections of the firm’s governance and risk management systems to ensure ongoing compliance with the regulations and rules of the FSRA. Therefore, a non-Financial Services Entity that holds itself out as being regulated in the ADGM, without appropriate context, may mislead the public into thinking that it is supervised to the same degree as a Financial Services Entity.
Read more: ADGM publishes Quick Guides for designated non-financial businesses, professions
All ADGM Entities are reminded to provide clear and appropriate context when representing their regulatory status in any promotional, business or other communication. In this regard, appropriate phrases that ADGM Entities may use include:
For financial services entities
- “Entity A is regulated by the ADGM Financial Services Regulatory Authority.”
- “Entity B is a holder of a Financial Services Permission in ADGM.”
- “Entity C is licensed by the ADGM Financial Services Regulatory Authority.”
- “Entity D is authorised by the ADGM Financial Services Regulatory Authority.”
For non-financial services entities
- “Entity A is registered with the ADGM Registration Authority.”
- “Entity B is a holder of a Commercial Licence issued by the ADGM Registration Authority.”
- “Entity C has received a Commercial Licence from the ADGM Registration Authority.”
ADGM Entities must avoid using imprecise and potentially misleading phrases such as:
- “Firm A is regulated by the ADGM.”
- “Firm B is an ADGM-regulated entity.”
- “Firm C is subject to regulations in ADGM.”
In-principal approval
It should also be noted that an in-principle approval issued by the FSRA to an applicant entity to conduct financial services activities is not a financial services permission. The applicant entity is not a Financial Services Entity, and it must not hold itself out as being regulated by the FSRA before it is granted a financial services permission.
The Relevant Authorities advise members of the public and potential investors to check the status of firms operating in ADGM by checking ADGM’s online public registers:
- FSRA Public Register – a list of Financial Services Firms regulated by the FSRA and the regulated activities they are authorised to provide.
- RA Public Register – a list of all legal persons registered in ADGM and the activities they are licensed by the RA to conduct.
Members of the public and potential investors should always exercise caution when contacted by a representative of any entity that purports that it will register with, or obtain a licence from, the Relevant Authorities to conduct business in or from ADGM. Prior to dealing with such entities, members of the public and potential investors should always exercise due diligence, including confirming the entity’s current status and the scope of their licence, by checking ADGM’s public registers.
These include the International Organisations of Securities Commissions (IOSCO), the Basel Committee on Banking Supervision (BCBS) and the International Association of Insurance Supervisors (IAIS), of which the FSRA is a member.
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