SFC and FSRA forge new partnership to strengthen oversight of investment managers

24 June 2025 | Asia, Dubai | Articles

The 50th IOSCO Annual Meeting held from 12 to 14 May 2025 in Doha, Qatar provided the SFC a chance to enhance its connection with international regulatory bodies, aiming to strengthen Hong Kong’s integration with the Middle East and other global capital markets. This meeting marks an important step in strengthening regulatory cooperation between both regions, as well as their integration with other global capital markets. It also aims to promote collaborative investment and fund offering opportunities.

Establishing a collaborative framework

During the meeting, the SFC signed separate Memorandum of Understandings (MoU), with the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM), the Central Bank of Ireland, and the Ontario Securities Commission of Canada, establishing a framework for cross-border collaboration and market access. Attendees of the event also discussed common topics at the top of the global financial services agenda, including FinTech and Artificial Intelligence.

In particular, the MoU signed with FSRA of ADGM establishes a framework for consultation, cooperation, and information exchange regarding the oversight of regulated entities involved in cross-border fund management and advisory activities. Mr. Emmanuel Givanakis, FSRA’s CEO, emphasised that “the MoU strengthens regulatory cooperation, improves oversight, and promotes greater transparency, benefiting both jurisdictions”. Ms. Julia Leung, SFC’s CEO, noted that “the agreement is a significant step toward closer regional connectivity between Hong Kong and the Middle East, facilitating collaboration on investment and fund offerings”.

Understanding the UAE market environment

In May last year, Ms. Julia Leung and Ms. Christina Choi, Executive Director of Investment Products, also met with Mr. Emmanuel Givanakis in the annual general meeting of the IOSCO held in Athens. They discussed regulatory and market developments in Hong Kong and ADGM and explored potential collaboration on asset management.

To assist Hong Kong asset managers, the SFC has published a guide detailing the ADGM market landscape and how Hong Kong funds can access the ADGM and the UAE through the UAE fund passporting regime.

There are three types of Domestic Funds in the ADGM, namely Public Funds, Exempt Funds and Qualified Investor Funds. Only Public Funds can be marketed to retail clients, while the other two funds can be marketed to professional clients only.

To establish and manage Domestic Funds in the ADGM, a fund manager must be:

• A domestic fund manager authorised by the FSRA to manage collective investment funds; or
• A foreign fund manager regulated by a recognised financial services regulator, who must: (a) comply with ADGM laws and regulations; and (b) appoint an FSRA-licensed fund administrator or trustee.

Hong Kong is recognised as a compliant jurisdiction. However, foreign fund managers face limited opportunities and should seek legal advice, as they do not hold FSRA Financial Service Permission and cannot promote their funds directly within the ADGM or to the wider UAE market.

Offering of foreign Funds in ADGM

Promotion must be conducted by licensed entities in relevant jurisdictions.

Firms licensed by the FSRA to advise on and arrange investments can market and sell units of Foreign Funds (e.g., Hong Kong-domiciled funds) in the ADGM under the following conditions:

1. Notify the FSRA within 30 days of starting marketing activities;
2. Only sell units to retail clients if allowed and if the fund can be sold to retail clients in its home jurisdiction; and
3. Meet specific prospectus requirements for the Foreign Fund.

While FSRA-licensed firms must inform the FSRA about the Foreign Funds, the funds and their managers do not need FSRA registration or approval.

For Hong Kong fund managers wishing to offer their ETFs in the ADGM, they can utilise this Foreign Fund regime through FSRA-licensed firms, noting that there is no local exchange in the ADGM.

UAE Passporting Regime

In 2019, the UAE’s Securities and Commodities Authority (SCA), Dubai Financial Services Authority (DFSA), and the FSRA of the ADGM established a “Protocol” for coordinated supervision of domestic fund marketing and sales. This framework allows funds to passport between the ADGM, DIFC, and mainland UAE, supported by specific rules for each jurisdiction.

Under the UAE Passporting Regime, a domestic fund can be promoted in other jurisdictions without additional authorisation once it completes the necessary notification and registration procedures in its home jurisdiction.

The regime applies to fund managers, domestic funds, agents, and licensed persons established in the UAE, DIFC, or ADGM. They must be authorised by their home regulator to promote passported funds in or from their jurisdiction. They are also required to pay a notification fee and an annual fee to their home regulator. Once notified, both the home and host regulators will update their registers to recognise the domestic fund as a “passported fund”.

Hong Kong-domiciled funds, whether public or private, can reach investors in the wider UAE market using a master-feeder structure. In this setup, a Hong Kong fund manager partners with a local ADGM manager to create a local feeder fund in the ADGM. This feeder fund, managed by the local ADGM manager, offers the Hong Kong fund (the master fund) to investors in the UAE through the UAE Passporting Regime.

With the 2026 IOSCO 51st Annual Meeting poised to be hosted by Egypt’s Financial Regulatory Authority, the continuation of global cooperation between financial regulatory bodies is crucial to furthering knowledge sharing between jurisdictions and enhancing transparency across global capital markets.

How can Bovill Newgate help guide you through the UAE and Hong Kong licensing processes?

Navigating the licensing landscape in the UAE can be complex. Our Dubai team specialise in guiding businesses through the entire licensing process, ensuring you meet all regulatory requirements efficiently and effectively.

Having successfully managed hundreds of global applications, our experts in Hong Kong can identify the SFC’s areas of focus during the application process and the questions you’re likely to be asked.

Get in touch to find out more.