MENA Asset Management Survey 2012 - National Bank of Abu Dhabi

Regulatory Trends
Industry Perspective: New Requirements: The
Opportunity for Excellence?
Hazem Elmalla - Head of Advent Professional
Services MENA
Advent Software
Regulation – the recent UAE mutual fund regulation and
the KSA’s CMA regulations of the last few years in
particular – is having a big impact on the investment
management industry in the Middle East. This is coupled
with an added onus on enhancing the client experience:
investors and institutional clients are more demanding than ever in terms of reporting,
access to information on their portfolios (including online and mobile channels), and
suitability of their investments to their objectives. These new regulatory and client
requirements have driven many managers in the region to upgrade their infrastructure
and replace in-house systems with scalable, reliable, industry-standard solutions.
Indeed, the world is still feeling the repercussions of the market meltdown of 2008, and
initiatives for tighter regulation of investment funds have sprung in all corners of the
globe, including the Middle East. Their aim is to avoid another crisis on the scale of the
last one, and they revolve around Know Your Client (KYC), anti-money laundering
(AML), investor protection, risk management, and transparency in particular.
UAE Mutual Fund Regulation
In July 2012, the United Arab Emirates’ Securities and Commodities Authority (SCA)
issued a new set of regulations for mutual funds with strong provisions around Islamic
finance, corporate governance, risk management, and, of course, investor protection.
Some of the key requirements revolve around maintaining certain asset allocations: a
firm must own between 3 and 49% of each fund it manages, and investments in a single
security or company are capped to avoid over-exposure on any given asset. A minimum
of cash holdings is also compulsory and must be continuously monitored, to ensure the
fund can meet its payment or redemption obligations at all times.
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