UNITED ARAB EMIRATES Law and Practice Contributed by: Arnold Krutilins and Gabrielle Margerison (nee Lowe), White & Case LLP
services from another jurisdiction. However, certain financial promotion restrictions may not be applicable in reverse solicitation scenarios. 3. Robo-Advisers 3.1 Requirement for Different Business Models Robo-advisers are found in the UAE’s investment and asset management space. Although business models will largely depend on the particular business proposition being offered, hybrid models are common, combining traditional asset and investment manage - ment services with automated solutions in respect of assessing risk appetite or providing algorithm-based financial planning. Arranging, advising and dealing in investments, and managing assets, constitute regulated financial activi - ties in the ADGM and the DIFC. Similarly, promotion and carrying on the activities of a financial adviser are licensed financial activities under the CMA Rulebook. Where companies wish to carry on these services they will fall within the scope of these licensing regimes. In 2019, the FSRA issued supplementary guidance for obtaining regulatory authorisation to conduct digital investment management (robo-advisory) activities in the ADGM. The guidance lays down the applicable permissions that a company will need to apply for in order to carry on digital investment management activities, along with the key controls surrounding technology and algorithmic governance that a digital investment manager will need to implement. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Incumbent legacy players within the UAE investment management market use robo-advisers largely in the context of assessing the risk appetite of clients at a retail level and providing investment advice on the basis of this risk assessment. The UAE robo-advisory segment in wealth manage - ment is still at a nascent stage compared to its popu - larity in the US and the UK. However, with banks tak - ing the lead and the UAE’s growing status as a home
for future-facing technology companies, the region represents one of the key markets for robo-advisory services in the MENA region with a new wave of digi - tal investment platforms aiming to provide low-cost options for young professionals and affluent clients. Due to the increased use of robo-advisers in gener - al, it is expected that regulators in the UAE will start to implement regulatory frameworks governing the licensing and use of robo-advisory services in the coming years. 3.3 Issues Relating to Best Execution of Customer Trades Depending on the nature of the regulated financial activity offered, best execution principles will also apply to companies providing robo-adviser services. These best execution principles require companies to take reasonable care to determine the best execution available for an investment under the prevailing mar - ket conditions and to offer and deal in prices and con - ditions that are no less advantageous to the relevant client than the prevailing market conditions. Best execution principles are largely set out in the Conduct of Business (COB) Rulebook Modules issued by both the DFSA and the FSRA. Guidance on best execution provided by the DFSA states that when determining best execution, regard should be had for direct and indirect costs, the relevant order type and the size, settlement arrangements and timing of that client’s order that could affect decisions on when, where and how to trade. Requirements to achieve best execution prices in favour of clients are also set out in the CMA Rulebook. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities In “onshore UAE”, the CBUAE has issued regulations setting out the protections that apply with respect to the provision of finance to consumers and small to medium-sized enterprises (SMEs). However, the authors are not aware of differences in the business
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