On 1 January 2026, Federal Decree-Law No. 32 of 2025 concerning the Capital Market Authority and Federal Decree-Law No. 33 of 2025 concerning the Regulation of the Capital Market entered into force, ushering in a substantial transformation of the legislative and institutional architecture of the United Arab Emirates’ capital markets. The two decree-laws repealed Federal Law No. 4 of 2000 — which had served as the principal regulatory reference for the sector for twenty-five years — and brought the framework into closer alignment with modern international practice in capital markets supervision.
1. The Institutional Shift: From the SCA to the CMA
Federal Decree-Law No. 32 of 2025 (“FDL 32”) establishes the Capital Market Authority (the “CMA”) as an independent federal public authority with legal personality and full financial and administrative autonomy. The CMA succeeds the Securities and Commodities Authority (“SCA”) in all of its rights, obligations and contracts, and is substituted for the SCA wherever the latter appears in existing legislation. The transition is, however, far more than a rebrand. Article 27 of FDL 32 preserves the continuity of regulatory decisions and implementing regulations issued before its entry into force, provided they do not conflict with the new framework — a practical safeguard intended to maintain stability during the transitional period.
FDL 32 also introduces a clearer governance and accountability architecture for the new authority. The decree-law sets out requirements concerning the composition of the CMA’s board, the appointment of its chairperson and counsel, information-security and confidentiality obligations applicable to all board members and staff, and external auditing requirements. The CMA’s statutory objectives include safeguarding the safety and efficiency of the capital market, providing an environment conducive to capital investment, protecting the interests of investors and market participants, and embedding sound and fair practices that serve the national economy.
2. Substantive Reforms under FDL 33 of 2025
Federal Decree-Law No. 33 of 2025 (“FDL 33”) sets out the substantive framework for capital markets regulation and introduces several notable innovations. Article 2 of FDL 33 widens the territorial scope of application to capture financial products and activities carried out within the UAE, by persons operating in financial or other free zones, and by persons whose activities target clients in the UAE — even where the activity itself is conducted from outside the country. This extension reflects a deliberate move toward closer supervision of cross-border financial activity affecting UAE investors.
A further innovation is the express recognition of a “Regulatory Sandbox” framework, allowing innovative financial products and services to be tested in a controlled environment under the CMA’s supervision before being made subject to full licensing requirements. The sandbox is designed to support the fintech sector while preserving investor-protection safeguards. In parallel, Article 37(2) of FDL 33 codifies a safe harbour for price-stabilisation activities, resolving the long-standing ambiguity surrounding the legal status of such practices and the theoretical risk that they could be characterised as market manipulation. Article 33(2) further permits issuers to delay the disclosure of inside information where immediate disclosure would cause serious harm to their interests or those of their shareholders, subject to clearly defined conditions.
3. Strengthened Enforcement and Penalties
FDL 33 markedly strengthens the enforcement regime. Article 71 provides that any person who conducts a financial activity in the UAE without a licence, approval, registration or accreditation from the CMA may be subject to imprisonment for a term of not less than one year and a fine of up to AED 250 million. The substantial monetary ceiling reflects the legislator’s intent to deter unlicensed activity and to scale sanctions in proportion to the potential harm such conduct can cause in the financial sector.
4. Practical Implications for Market Participants
The new framework requires issuers, brokers, fund managers, financial advisers, virtual-asset service providers and investors to review their legal and regulatory arrangements in light of the changes. Areas warranting review include the continued adequacy of existing licences, the application of the expanded territorial scope, disclosure mechanisms, internal compliance policies, underwriting and intermediary arrangements, and corporate governance documentation that may need to be updated to reflect the new standards.
Mohamed Al Azazi Advocates & Legal Consultants advises companies and investors seeking to understand the impact of this legislative shift on their legal positions and activities in the UAE capital markets, and to develop integrated compliance roadmaps that keep pace with the evolving regulatory environment.