From the SCA to the CMA: UAE Capital Markets Authority Introduced under New Federal Laws

On 1 January 2026, Federal Decree Law No. 32 of 2025 Concerning the Capital Market Authority (“FDL32”) and Federal Decree Law No. 33 of 2025 Concerning the Regulation of the Capital Market (“FDL33”) came into effect. These laws introduce significant changes to the regulatory framework for capital markets and securities in the United Arab Emirates (“UAE”), repealing Federal Law No. 4 of 2000 (“Law No.4”) which inaugurated the Emirates Securities and Commodities Authority (the “SCA”). 

At the core of the reforms is FDL32, which establishes the independent federal Capital Market Authority (the “CMA”), replacing the SCA in all its rights, obligations and contracts and substituting references of “SCA” to CMA, sets clear objectives of the CMA (including its regulatory functions and powers) and enhances the supervisory powers of the CMA.  

FDL33 addresses the regulatory framework for financial products and activities, including licensing and conduct standards, market operations and infrastructure, administrative sanctions and criminal offences.  FDL33 also introduces an overhaul of the UAE’s market abuse framework initially introduced under Law No.4.

Taken together, FDL32 and FDL33 go beyond a rebrand of the SCA and purport to introduce significant changes to the regulatory landscape within the UAE and we eagerly await the implementing regulations of these two major pieces of legislation.  Both FDL32 and FDL33 came into force on 1 January 2026.    

In this context, we set out ten key points to note as introduced or amended by FDL32 and FDL33. We will be following this article up with a series of “deep dives” into topics of interest as our clients continue to prepare for the new regime.

1.      The driver for change

Law No.4 which established the SCA was enacted at a time when the UAE’s financial markets were still at an early stage of development. Reflecting those conditions, the SCA’s original mandate was deliberately narrow, focussing primarily on traditional equity and debt securities and the regulation of commodity exchanges. While subsequent regulatory initiatives incrementally expanded the SCA’s licensing perimeter and supervisory powers, the underlying legislative framework increasingly struggled to keep pace with the scale, sophistication, and internationalisation of the UAE’s capital markets. In particular, it did not fully accommodate the growing complexity of financial products, increased market liquidity, expanding cross-border activity, or the heightened regulatory emphasis on investor protection and market integrity.

The reforms introduced through FDL32 and FDL33 respond directly to these structural limitations. They recalibrate the regulatory framework to reflect the SCA’s evolved role as the supervisor of an increasingly complex capital markets ecosystem, while embedding international best practices in a manner tailored to the UAE’s legal, financial, and supervisory landscape. Taken together, the new laws mark a decisive shift from incremental regulatory expansion to a modernised, future proofed capital markets regime.

2.      The CMA’s objectives and powers

FDL32 establishes the new CMA as a federal public authority with a separate legal personality.  This change is deliberate to equip the CMA with the autonomy and capacity required to discharge its expanded mandate introduced under the new laws. FDL 32 also confirms the CMA’s succession to the SCA, including substitution in legislation and ensuring legal and regulatory continuity.

The CMA’s mandate presents a strategic vision for the UAE’s capital markets. Its codified objectives include:

• ensuring the safety and efficiency of the capital market;
• regulating and developing the capital market;
• achieve the State's objectives for the capital market;
• developing the capital market in the State as a financial centre with an international reputation;
• enhancing the State's competitiveness in international indices related to the capital market;
• promoting fair competition in the capital market;
• providing a suitable environment for capital investment to ensure the safety of transactions in the capital market and serve the national economy; and
• establish sound and fair practices to protect the interests of investors and market participants.

These objectives are expressly embedded within the legislation to guide the CMA's regulatory decision making and may serve as reference points for accountability in the context of judicial review.

Article 2 provides that the CMA succeeds the SCA as legal successor in all its rights, obligations, and contracts.  This statutory succession mechanism ensures regulatory continuity, with existing decisions, rules and implementing legislation to remain in force to the extent they do not conflict with FDL32 and FDL33, until formally amended or replaced by the new CMA. 

Article 5 of FDL32 confers broad and flexible powers on the CMA to enable it to deliver its mandate effectively.  The powers are broad but generally include, in particular:

• authorisation, licensing and ongoing supervision of regulated activities and market participants;
• investigatory and enforcement powers, including inspections, the imposition of penalties and sanctions, and the suspension or withdrawal of licences;
• policy making powers including proposing and drafting legislation, issuing regulations and publishing regulatory guidance to enhance market efficiency, transparency and governance standards;
• identifying, monitoring and managing systemic risks within the UAE market;
• developing financial activities which sustainably support financial innovation and  technological progress; and
• establishing frameworks for the operation of  foreign regulated firms and cooperating with international regulators, including through supervisory coordination and information  sharing.

FDL32 also sets out a number of governance and accountability requirements applicable to the CMA, including, board composition, chairperson and counsel, and structural requirements, information safeguarding requirements applicable to board members and all CMA staff and external auditing requirements. 

Article 27 of FDL32 clarifies that regulatory decisions and implementing regulations entered into before FDL32 and FDL33 shall continue to be in force provided they do not conflict with FDL32.  Particularly, FDL32 provides that Cabinet Decisions No. (111) of 2022 and (112) concerning Regulation of Virtual Assets and their Service Providers, whereby the SCA could delegate its authority to local authorities to regulate and supervise virtual assets (including to the Dubai Virtual Asset Regulatory Authority (“VARA”)) remain in effect until they are repealed, amended or replaced.

3.      The scope of FDL33 and the impact to financial products and financial activities

FDL33 sets out the substantive legal framework to the powers afforded to the CMA through FDL32.  FDL33 addresses, amongst other items, licensing requirements, conduct of business, market abuse prevention, disclosure requirements and enforcement mechanisms. 

Article 2 of FDL33 delineates the scope of application by category and expressly captures: (a) Financial Products when dealt with within the UAE; (b) Financial Activities practiced within the UAEe or by any person in a UAE freezone, whether conducted within or outside the freezone; (c) licensed persons, approved persons, issuers and foreign issuers operating within the UAE, funds and connected persons; (d) any person targeting clients within the UAE, even if the activity is conducted outside of the UAE or from a financial free zone; and (e) any person engaging in activities, investing or conducting transactions subject to FDL 33 and related legislation.  FDL33 clarifies that the legislation exempts specified public sector issuances and funds offered to the public or listed and excludes activities/systems under the Central Bank and financial free zones.

The explicit inclusion of persons or entities that target clients in the UAE materially expands the CMA’s regulatory licensing perimeter. Under the previous regime, certain cross-border activities were at risk of falling within scope of the regime, but the absence of express statutory language left room for interpretation. By virtue of FDL33, cross-border activities - whether conducted from outside the UAE or from the financial free zones - where those activities are directed at UAE customers appear to now be brought within the scope unless an exemption applies. This represents a significant broadening of the licensing perimeter and brings the regime more closely into line with other international regulatory frameworks, where cross-border activity does not automatically sit outside the licensing net. It remains to be seen whether the CMA will retain the existing licensing exemptions on which firms currently rely when undertaking licensable activities on a cross-border basis.

4.      The new licensing regime and impact to firms

FDL33 establishes a comprehensive licensing regime that requires entities to obtain separate licences for each discrete activity they perform, even where activities are related. Licences are time limited and renewable subject to ongoing compliance, though some may be open ended, and the CMA retains authority to vary conditions or scope. Voluntary suspension must be requested in writing and is limited to 12 months unless extended by the CMA. FDL33 confirms the suspension cap and the CMA’s discretion to extend and also addresses revocation if activity does not resume and related wind-down measures. This preserves the existing position pursuant to Securities and Commodities Authority Decision No. 13/RM/2021 as amended from time to time (the “SCA Rulebook”), and FDL33 clarifies that existing licensed firms will not need to seek additional regulatory permissions simply because the CMA is assuming responsibility unless their business models now involve undertaking additional financial activities in relation to financial products.

5.      Systemically Important Licensed Persons

FDL33 introduces a new framework for firms that are deemed to be “Systemically Important Persons”. The CMA may designate any licensed person as systemically important and will issue regulations setting out the designation criteria. Once designated, the CMA may require a prudential recovery plan, request information to assess that plan and require remediation of deficiencies. The CMA also has early intervention tools (including requiring implementation of recovery measures, additional financial resources and liquidity, and changes to strategy or structure) and may exercise resolution and liquidation powers for systemically important licensed persons. These measures sit alongside the  CMA’s ability to appoint temporary managers or committees and to impose other measures to protect financial stability and investors.

This represents a significant change for the UAE financial markets, as this category of firm did not exist under the previous SCA regime. Firms should proactively engage with their SCA supervisors to assess whether they may be designated as Systemically Important Licensed Persons and to understand the potential implications for their existing business operations.

6.      New and expanded market conduct prohibitions

FDL33 represents a material expansion and modernisation of the UAE’s market abuse framework, moving decisively beyond the more principles based approach that characterised the former SCA regime. The new law codifies a clearer and more granular set of market abuse offences, sharpening both the scope of prohibited conduct and the regulatory boundaries within which market participants must operate. In particular, FDL33 expressly delineates insider trading offences, prohibiting not only direct trading but also indirect dealings in securities by any person in possession of insider information, thereby capturing a wider range of conduct and actors across the information chain.

FDL33 also introduces a more developed suite of market manipulation offences, including manipulative trading practices, the dissemination of false or misleading statements, and the incitement or circulation of rumours capable of influencing issuer valuations, securities prices, or investor decision making. The regime further criminalises exploitation of insider information and the facilitation of fraudulent transactions, reflecting a clear policy intent to address both primary misconduct and ancillary or enabling behaviour. Taken together, these provisions signal a shift towards a more outcomes focused and behaviourally precise market abuse regime.

From a comparative perspective, the structure and breadth of these prohibitions appear deliberately benchmarked against mature international regimes, most notably the EU Market Abuse Regulation (MAR). Crucially, FDL33 is underpinned by enhanced enforcement powers vested in the CMA, including robust surveillance, investigation, and information-gathering tools. These are complemented by a graduated suite of administrative and criminal sanctions designed to deter misconduct and reinforce market discipline. In practice, this materially elevates regulatory expectations for issuers, intermediaries, and market participants, and underscores the CMA’s intention to position the UAE capital markets within global standards of market integrity and investor protection.

7.      Investor protection, settlement guarantee and shareholder protections

Article 44 of FDL33 provides that the CMA is able to stablish an “Investor Protection Fund,” subject to its supervision and oversight, with independent legal personality and financial liability, the purpose of such fund is to protect investors’ funds from risks identified by the CMA . The CMA  shall issue a decision regarding the establishment of the fund, its operational mechanisms, management, membership conditions, financial resources, asset management and investment mechanisms, obligations towards investors, risks covered, eligibility cases and periods, fund dissolution and liquidation mechanisms, associated penalties, and any other related matters.

Separately, Article 45 of FDL33 provides that the central clearinghouse may establish a “Settlement Guarantee Fund” with legal personality and financial independence. Its purpose is to guarantee settlement of transactions executed in the market. The central clearinghouse will set the fund’s regulations, subject to the CMA’s approval. The fund is under the CMA’s supervision and oversight.  These express statutory bases for the Investor Protection Fund and the Settlement Guarantee Fund are a significant development and align the CMA regime more closely with international market infrastructure practice.

With respect to shareholder protection, FDL33 reinforces issuer obligations and disclosure controls and contemplates CMA regulation of ownership and control. In particular, issuers and foreign issuers must file documents, data, financial reports and other information, meet disclosure requirements, notify the CMA of any material information and provide clarifications as required by the CMA or the market. The CMA and the markets will set the detailed rules, including on disclosure of ownership percentages. Detailed takeover mechanics, including any mandatory offer thresholds, will be set in implementing decisions rather than in the primary law, as was the case with the SCA previously.

The evolution of issuer and market conduct obligations under FDL 33 will require firms to review their corporate governance frameworks and assess whether any changes are necessary. Existing and prospective controlling shareholders should also closely monitor decisions and regulations issued by the CMA and the markets to determine whether regulatory thresholds are revised in a way that brings firms into, or removes them from, the scope of these requirements.

8.      Funds and the new virtual assets list

The funds framework has been revised to with the introduction of collective investment schemes further aligning the CMA framework with its UK and EU counterparts. Under Article 38, investment funds enjoy independent legal personality and financial liability and may be established in one of two forms: as an investment fund established and licensed by a CMA decision; or as a form of commercial company recognised and established in accordance with applicable UAE company laws, with CMA prior approval. Notably, the CMA may exempt such funds from certain provisions of applicable UAE company laws in line with the nature of their financial activities. The CMA’s board may issue subordinate legislation setting out the comprehensive licensing and regulatory framework specific to different fund categories to be issued. Fund managers should review their existing business models to assess how they fit within the new regime and to identify any additional obligations that may apply.

Article 39 of FDL33 expressly regulates trading of virtual assets, provides for a CMA-maintained registration/listing mechanism, prohibits trading unless: (i) the asset is on a new “official list” of virtual assets; (ii) trading is via a licensed virtual asset platform approved by the CMA; and the virtual asset is registered with the CMA; and confirms CMA oversight of virtual asset activities within the State and in the free zone. This has direct implications for service providers and narrows the tradable universe to the listed/registered assets.

While Cabinet Decisions No. 111 of 2022 and No. 112 of 2022 on the regulation of virtual assets and their service providers remain in force, it remains unclear how these decisions and the interaction with VARA will operate following the end of the transitional period. It also remains unclear how this will interact with the Central Bank of the United Arab Emirates’ Payments Token Services Regulation.

9.      Supervision and enforcement

The CMA is vested with broad supervisory authority over all “persons subject to its supervision,” with explicit objectives encompassing investor protection, market integrity and transparency, market development, and the safeguarding of financial stability. Its toolkit includes information gathering powers, onsite inspections, participation in issuer governance, the ability to restrict transactions and activities, and surveillance systems to detect breaches.

These authorities are materially more expansive than those previously available to the SCA. For administrative violations, the CMA may impose a wide spectrum of sanctions, including warnings, fines, suspension or cancellation of licences, approvals or registrations, activity or position bans, and the public disclosure of penalties. Financial penalties may reach the greater of AED 200 million or ten times the illicit gains realized or losses avoided. In addition, criminal liability will now apply to firms carrying on regulated activities without a licence as well as for serious market misconduct offences, with potential imprisonment and fines of up to AED 250 million.

Overall, the enforcement framework under the CMA regime is substantially more stringent than under the former SCA regime, with higher maximum penalties and a broader range of sanctions available including criminal liability. As a result, the regulatory enforcement penalties for firms will be materially increased under the new regime.

10.   Potential ambiguity on transitional measures

Whilst FDL32 and FDL33 contemplate a transitional period, key uncertainties remain as to when existing licence holders must apply for new licences or variations, whether any grace periods will apply to compliance with the new regime, and the extent of any grandfathering for nonconforming legacy structures. FDL32 preserves transitional measures only to the extent they do not conflict with its provisions, which raises a critical question: where there is a conflict, are the new obligations immediately operative.

Further regulatory clarity is also required on whether FDL33 now displaces the SCA Rulebook and, if so, the immediate next steps for firms. Additional guidance is needed on the regime’s extraterritorial reach, including what constitutes a sufficient UAE nexus and whether any reverse solicitation type exemptions available under the previous SCA regime will be maintained.

Concluding remarks

The transition from the SCA to the CMA is more than institutional restructuring and a rebranding exercise, it is a comprehensive reset of the UAE’s capital markets framework. With both laws effective since 1 January 2026, with a one-year transition period for FDL33. This reset combines an independent regulator with clearly stated objectives and broad supervisory, policy‑making, and enforcement powers, positioning the regime to address deeper liquidity, cross‑border activity, and financial innovation.  However, the true impact, particularly on licensing perimeters, prudential status, funds, market conduct, and virtual assets, and whether any exemptions or safe harbours will be maintained, will only be clear once the CMA issues the implementing regulations and guidance. Prompt issuance of these regulations is essential for firms to complete gap-analyses and calibrate compliance. By coupling an independent regulator with clearly articulated objectives and wide-ranging powers, FDL32 and FDL33 align supervisory tools to the realities of deeper liquidity, cross-border activity, and financial innovation. The new perimeter’s explicit extraterritorial reach, together with enhanced licensing, conduct, disclosure, and enforcement frameworks, brings the regime closer to international best practice while retaining flexibility to calibrate rules to the UAE market.

In the near-term, the challenge is transition without complacency. Existing licences and decisions carry forward only to the extent they are consistent with the new laws, and open questions remain on timing, grandfathering, and the interface with legacy SCA rules particularly around extraterritoriality and virtual assets. Firms that conduct structured gap analyses, prioritise remediation of high-risk exposures, and engage early with CMA guidance will minimise disruption and reduce enforcement risk. The strategic opportunity is equally clear. A more transparent, predictable, and risk sensitive regime should support deeper capital formation, broaden product sets, and enhance investor confidence.

Co-authored by Clemency Hess, Trainee Solicitor and Amber Cater, Graduate Solicitor Apprentice