ADGM lowers fund capital requirements to fall into line with international counterparts

The free zone’s regulator, unveiled new base capital requirement rules for authorised firms managing collective investment funds.

Abu Dhabi Global Market says the regulation changes are meant to bring its policies more in line with international standards. Mona Al Marzooqi / The National
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Abu Dhabi Global Market (ADGM) has announced lower capital requirements for managers of selected funds established in the free zone, bringing its regulations into line with other international jurisdictions.

The free zone’s regulator, the Financial Services Regulatory Authority (FRSA), unveiled new base capital requirement rules for authorised firms managing collective investment funds (CIF).

The FRSA said that it was adopting an enhanced tier structure for base capital requirements (BCR), previously set at US$250,000. Under the new structure, the BCR requirement for CIF managers of Public Funds will be revised down to $150,000. Managers of exempt funds and qualified investor funds will have a BCR of $50,000.

“This recognises that CIF managers of Public Funds present higher conduct risks, and should have a BCR to support the necessary risk management systems and controls in order to assure compliance with the relevant regulations and rules,” the FRSA said.

The new regulations came into effect yesterday. Regulations related to expenditure base capital minimums for authorised firms are unchanged.

“The revisions are introduced to more keenly address the needs of the market participants, as well as to provide enhanced alignment with capital-adequacy standards practised in established jurisdictions including the EU and the UK,” the regulator said.

ADGM announced a number of proposed changes to its rules and regulations last week, facilitating the establishment of private real estate investment trusts as an Exempt Fund or Qualified Investor Fund, and the alignment of the description of the regulated activity of managing a CIF in line with international practice.

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