UAE Enacts Landmark Capital Markets Laws, Creates New Regulatory Authority

{getToc} $title={Table of Contents}

New UAE capital markets laws create a Capital Market Authority and modernise supervision from January 2026

The United Arab Emirates has enacted two federal decree laws that represent the most comprehensive restructuring of the country's capital markets regulatory framework in recent history. Federal Decree-Law No. 32 of 2025 and Federal Decree-Law No. 33 of 2025 came into force on 1 January 2026, formally renaming the Securities and Commodities Authority (SCA) as the Capital Market Authority (CMA) while significantly expanding its supervisory powers and enforcement capabilities.

The reforms align UAE capital markets regulation with international standards set by IOSCO, the World Bank, IMF, and FATF. According to government authorities cited by Middle East Briefing, the new framework supports "the soundness and stability of the capital markets sector" while ensuring fair competition and elevating the maturity of the UAE's financial ecosystem.

Expanded Supervisory Powers and Digital Asset Oversight

The CMA's new statutory mandate extends beyond traditional securities oversight to encompass comprehensive capital markets supervision. Core functions include regulatory oversight of licensed financial activities, issuance of binding regulations, systemic risk monitoring, governance enforcement, and prudential oversight during market disruptions. The DIFC and ADGM retain their independent regulatory frameworks under the DFSA and FSRA respectively.

The expanded scope notably includes digital assets, reflecting the UAE's commitment to integrating cryptocurrency and virtual asset services into the broader financial ecosystem. By the end of 2025, over 70 Virtual Asset Service Providers had received UAE licenses, indicating a market prepared for institutional entry and regulatory maturation.

Early Intervention and Resolution Framework

A significant component of the reforms introduces proactive tools for managing financial stress among licensed entities. The CMA can now deploy early intervention measures when firms exhibit material weakness, including:

Activation of recovery and resolution plans
Imposition of additional capital and liquidity requirements
Strategic, operational, or managerial restructuring
Appointment of temporary administrators

Where recovery is no longer viable, the CMA gains expanded resolution powers to act without shareholder or creditor consent, including dismissing senior management, placing firms under temporary administration, and overseeing mergers, acquisitions, or liquidation. This dual-role structure aligns the UAE with international financial-stability models used in advanced regulatory jurisdictions.

Enhanced Penalties and Investor Protection

The decree laws significantly strengthen enforcement discipline. Maximum penalties may now reach up to ten times the profit gained or losses avoided through a violation, with public disclosure of sanctions on the CMA's official website. The framework also introduces pre-prosecution conciliation mechanisms, enabling negotiated settlements before criminal proceedings—a measure that legal observers note aligns with broader UAE trends in alternative dispute resolution.

Two critical financial safety mechanisms receive formal regulation under the new laws. The Investor Protection Fund compensates eligible investors following intermediary default or insolvency, while the Settlement Guarantee Fund ensures settlement continuity even under extreme market conditions. CMA regulations require the Settlement Default Fund to cover either the largest clearing member's default or the combined exposure of the second and third largest clearing members.

Implications for Corporate Service Providers

The reforms carry substantial implications across the corporate services sector. Listing advisors and sponsors must adapt to enhanced supervisory expectations and updated disclosure standards. Fund managers face increased scrutiny, particularly regarding new fund categories, private placements, and digital asset exposures. Company secretarial and compliance providers will navigate tighter governance standards and mandatory disclosure requirements introduced under recent Commercial Companies Law amendments.

AML/CFT compliance providers face heightened demand as the UAE's alignment with FATF standards intensifies pressure on customer due diligence, beneficial ownership verification, and suspicious activity reporting. The CMA has mandated that special purpose vehicle applicants demonstrate robust anti-money laundering and risk management policies.

Market Infrastructure and Foreign Investment

The reforms strengthen the regulatory framework governing the Dubai Financial Market and Abu Dhabi Securities Exchange. The DFM's market capitalisation reached AED 907 billion in 2024—a 32 percent increase marking a decade-high milestone—while the ADX reached approximately AED 2.9 trillion. The DFM onboarded over 138,000 new investors in 2024, with foreign nationals comprising 85 percent and accounting for half of total trading value.

The modernised framework accommodates listing of foreign businesses through redomiciliation into UAE financial free zones or establishment of new holding companies in ADGM or DIFC. English translations of both decree laws and detailed implementing regulations are awaited, with market participants advised to monitor developments and engage with the CMA during consultation periods.