New legislation introduced the UAE Government hopes to modernise the financial sector's regulatory framework and strengthen market stability.

Two federal decree laws issued by the UAE Government grant broad powers to the Capital Market Authority to regulate and oversee the country’s financial sector.

The laws are designed to reinforce the Capital Market Authority's (CMA) independence and align UAE regulations with international standards, including those of the International Organisation of Securities Commissions, the World Bank, the International Monetary Fund and the Financial Action Task Force.

Under the new rules, the CMA can regulate licensed financial activities and issuers, monitor systemic risks and issue standards to ensure fair and effective practices. Proactive early intervention measures will allow the authority to respond to signs of financial deterioration in licensed institutions, including imposing additional capital or liquidity requirements, restructuring management or, in extreme cases, overseeing mergers, acquisitions or liquidation.

The decree laws also raise administrative fines, permitting the CMA to impose penalties of up to ten times the profit gained or loss avoided in violations. The reforms are expected to enhance international cooperation, facilitate mutual recognition procedures and support cross-jurisdictional recognition of financial products.