Dubai’s financial regulator is proposing a new fund class that aims to attract hedge funds and private equity funds to the region.
Reuters reported that the Dubai Financial Services Authority’s proposed new rules would loosen some of the regulations and operational costs in the Dubai International Financial Centre (DIFC). While the number of registered firms operating in the DIFC jumped 14% to 1,039 last year, it still does not compare to regions such as Luxembourg, Dublin and the Cayman Islands as a top domicile for funds.
The DFSA currently permit two types of funds: public fund and exempt funds. Public funds serve retail investors, while exempt funds are catered to experienced clients who are more able to cope with risk. The regulator’s proposal would create a third category—qualified investor exempt funds--that will give fund managers more flexibility in appointing custodians and filing fund reports. It would also increase the minimum investment to $1 million.
The DFSA emphasized that the new proposal would not sacrifice “responsible regulation.”