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    Dubai FSA Consults on Recovery and Resolution Framework

    January 29, 2020

    Dubai FSA published proposals to enhance the early intervention powers and to introduce a framework on recovery and resolution in the Dubai International Financial Center (DIFC). The proposals require amendments to the Regulatory Law (DIFC Law No. 1 of 2004) and addition of a new module of the rulebook called recovery and resolution (RAR). Some changes are also proposed to the glossary (GLO) and market rules (MKT) modules of the rulebook. The deadline for providing comments on this consultation is April 13, 2020.

    The Dubai FSA objectives, set out in the Regulatory Law, include promoting confidence and fostering financial stability in the financial industry in the DIFC, protecting the users of financial services and preventing damage to the reputation of the DIFC. This consultation paper presents proposals that seek to establish a comprehensive framework to allow to deliver on these objectives by reducing the risk of an authorized firm’s failure and, in case it is inevitable, by providing for an orderly management of such a situation. The proposed framework covers a number of tools allowing the Dubai FSA to improve on the measures employed in heightened supervision of firms considered as "weak." It also covers robust recovery and resolution planning for authorized firms that the Dubai FSA considers should be subject to this exercise. Finally, it covers a comprehensive framework for the resolution of firms that are failing or likely to fail.

    The proposals will be of interest to persons who

    • can carry on the financial service of accepting deposits (PIB prudential Category 1)
    • can carry on the financial service of providing credit or dealing in investments as principal (PIB prudential Category 2)
    • can manage a profit-sharing investment account where that account is received on an unrestricted basis (PIB prudential category 5)
    • intend to conduct the financial services referred to above
    • use, or propose to use, the services of the persons referred to above
    • are investors in capital instruments of the above-mentioned persons 
    • are advisors to the above-mentioned persons


    Related Link: Consultation Paper

    Comment Due Date: April 13, 2020

    Keywords: Middle East and Africa, UAE, Banking, Recovery and Resolution, DIFC, Resolution Framework, Dubai FSA

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