The recent changes to the collective investment regime of the DIFC have been well received by the asset management industry. Image Credit: Virendra Saklani/Gulf NewsDubai: Changes to the collective funds regime introduced by the Dubai Financial Services Authority (DFSA) will attract more funds to domicile in the jurisdiction of the Dubai International Financial Centre (DIFC), said speakers at a forum on New Funds Regime.
"The recent changes to the collective investment regime of the DIFC have been well received by the asset management industry. We have had several enquiries on domiciling funds in the DIFC. I know of at least three new funds that are being set up here," said Kevin Birkett, Head of Wealth Management and Capital Markets at the Dubai International Financial Centre Authority.
DFSA introduced a series of changes to the collective investment funds regime in the DIFC last mid-July.
The new changes in the regulations would allow DIFC-based fund managers to establish and manage funds in jurisdictions of their choice. Fund managers from recognised jurisdictions outside the DIFC can establish and manage a domestic fund without having to establish a place of business in the DIFC.
DSFA has also implemented a more competitive fee structure. The fund manager application fee has been reduced from $40,000 to $10,000.
An exempt funds regime has been established for professional clients, replacing the private funds regime, which will be completely phased out within two years.
Exempt funds are subject to lighter regulatory requirements but are only accessible by professional clients who make at least a minimum investment of $50,000 each.
Such Funds can only have 100 or fewer unit holders and cannot be offered to the public — distribution being only by way of private placement.
Transparency
Speaking on a panel discussion why it makes sense to domicile funds in the DIFC Jacques Visser, Managing Director-Legal & Compliance of Algebra Capital, said the DIFC and the DFSA have listened to the industry and have made changes to the DIFC's funds regime based on a series of sensible and pragmatic recommendations.
As a result, the DIFC is now more attractive as an investment centre for both foreign and domestic fund managers.
"Through the recent changes in the funds regime the DFSA has shown its willingness to engage with funds in a very efficient and transparent manner.
"The regulator has illustrated a level of pro-activeness during this exercise that is very much needed to ensure the DIFC's growth and future relevance as a key player in the global and regional fund management industry," Visser said.
Experts speaking at the panel said the low penetration of professional asset management business in the Middle East and North Africa, the strong economic growth fundamentals of the region and the larger share of a young population that has a strong propensity to invest would make a strong case for a regional fund management industry.
According to estimates by Credit Suisse Global equity research, professional asset management penetration in the Mena region is about two per cent of GDP.