FSRA Proposes Changes to Capital Market Rules, Plans to Launch Commodity Spot Trading

Abu Dhabi’s Global Market Financial Services Regulatory Authority is proposing changes to its capital market regulations aimed at significantly improving its virtual asset framework and introducing rules on commodity trading and quotas of emissions.

Wide-ranging changes, covering virtual assets, securities, derivatives, commodities and benchmarks, aim to strengthen ADGM’s capital market ecosystem, enabling greater participation within the markets primary and secondary schools in the financial center, the FSRA said on Monday.

The regulator has already published a consultation document and stakeholder responses must be submitted by May 20.

“The proposed enhancements to our capital markets framework will serve to unlock the next stage of investment and growth opportunities, including in virtual assets, spot commodities and emission allowances,” said Ahmed Al. Zaabi, president of the ADGM.

“These changes will strengthen our innovative leadership in trading virtual assets and commodities regionally and internationally.”

ADGM, one of the fastest growing international financial centers, is part of Abu Dhabi’s efforts to diversify its economy and connect the emirate to markets in the Middle East, Africa and the economies of South and East Asia.

It is home to thousands of businesses, including global enterprises, financial institutions, treasury centers, professional services firms, small and medium enterprises, start-ups, and FinTech companies such as trading entities. digital assets.

The FSRA has updated and amended regulations since its inception to mitigate risk and make ADGM an attractive space for local, regional and international businesses.

The proposed changes will position the ADGM and Abu Dhabi as the “court of choice”, Mr Al Zaabi said.

The amendments relate to FSRA’s Financial Services and Markets Regulation, as well as Market Rules, Market Infrastructure Rules, Business Conduct Rules, Islamic Finance Rules and fees, among others.

In 2018, the FSRA launched a framework for trading virtual assets by businesses, including platforms such as multilateral trading systems, custodians and brokers.

With the release of the consultation document, ADGM is beginning its transition to Virtual Assets Framework 2.0, the FSRA said.

Over the past four years, ADGM has seen “significant growth” in the number of licensed companies offering virtual asset-related activities, with 11 virtual asset companies fully licensed and approved in principle.

The proposed changes include changes to risk disclosure requirements and allow regulated multilateral trading venues and custodian groups to conduct non-fungible token business, he added.

ADGM is also proposing a new regulatory framework for spot commodity trading, becoming the first international financial center in the Middle East and North Africa to offer a framework for spot commodity and trading quota regulation. ‘episode.

Proposed enhancements to our capital markets framework will serve to unlock the next stage of investment and growth opportunities, including in virtual assets, spot commodities and emission allowances

Ahmed Al Zaabi, President, ADGM

The proposed changes also cover listed companies in the mining and petroleum sector and new regulatory requirements regarding benchmarking activities, the FSRA said.

With the new framework, the ADGM aims to support Abu Dhabi’s economic plans to develop new markets in commodities such as carbon, hydrogen and ammonia.

ADGM has already become a center for commodity trading, with both physical markets and commodity derivative financial markets.

In February, Thailand’s state-owned oil and gas company PTT opened a trade office at ADGM. PTT has joined the growing energy trading community based at ADGM, which includes Adnoc Global Trading, Adnoc Trading, ICE Futures Abu Dhabi, which launched Murban Futures in March 2021, and India Reliance Industries, which has opened its commercial office in October 2021.

The ADGM also proposes to strengthen its regulatory framework to allow offers and quotations from oil and mining companies. It aims to attract growth-stage companies by offering flexible capital structures and ways to raise funds.

Proposed changes include offering new shares to new investors, representing up to 20% of a company’s existing share capital per year, without triggering existing shareholders’ pre-emption and anti-dilution rights, the FSRA said. .

“The significant enhancements to our capital markets framework are part of the FSRA’s goal to continue to develop ADGM’s comprehensive regulatory framework to further enhance its dynamic funding ecosystem,” said Emmanuel Givanakis, Director General of the FSRA.

“Collectively, our regulatory framework meets the financing needs of a wide range of businesses at different stages of their growth and life cycle.

Updated: March 21, 2022, 07:52

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