UAE Law and Practice Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
peer-to-peer trading is the relative lack of regula - tory oversight in comparison to traditional trad - ing platforms or exchanges which operate in a highly regulated environment. As in other juris - dictions, the lack of regulation also raises con - cerns with respect to AML/CTF and adequate KYC. This is a particularly pertinent point, given the regulatory authorities’ active enforcement appetite in this space on account of the UAE’s addition to the FATF grey list on 4 March 2022 and its subsequent removal from the FATF grey list in February 2024. During its review of the UAE, the FATF cited the progress made by the UAE in strengthening the effectiveness of its AML/CTF regime including by applying effective and proportionate sanctions for AML/CTF non-compliance involving financial institutions and designated non-financial busi - nesses and professions and increasing suspi - cious transaction report filings for those sectors and increasing investigations and prosecution of money laundering. 6.7 Rules of Payment for Order Flow Payment for order flow is a compensation model under which a broker is paid a small commis - sion for routing client trade orders to a particular market maker. A market maker matches buy and sell orders to execute a trade. The SCA Rule - book provides that in executing trade orders, a broker must refrain from using the trading data, transactions and orders of its clients to achieve special benefits or gains. This indicates that the permissibility of payment for order flows in “onshore UAE” will be limited. 6.8 Market Integrity Principles With respect to “onshore UAE” , the SCA Mar - ket Law sets out specific provisions in respect of disclosure and transparency which must be adhered to.
In the ADGM, there is a prohibition on market abuse, which includes insider trading, dealing or disclosing inside information, and effecting transactions or orders to trade which employ fictitious devices or any other form of deception or contrivance or the dissemination of informa - tion which is likely to create a false or misleading impression, amongst other things. This is sup - plemented by the FSRA’s Code of Market Con - duct, which is intended to prevent market abuse by providing further clarity about what activities the FSRA might regard as constituting market abuse. The DIFC’s Markets Law 2012 sets out a prohibi - tion on various forms of market abuse, including: • fraud and market manipulation; • making false and misleading statements, conduct and distortion; • deception and use of fictitious devices; • insider dealing; The provisions on market abuse set out in the Markets Law 2012 are supplemented by the DFSA’s Code of Market Conduct, which also elaborates on the conduct, which may fall into these categories of market abuse. Finally, the VARA has issued its Market Conduct Rulebook pursuant to the Virtual Assets and Related Activities Regulations 2023. The Market Conduct Rulebook sets out provisions in respect of disclosure and transparency and requires VASPs to adhere to Virtual Asset Standards in providing and/or offering virtual asset activities. • providing insider information; • inducing persons to deal; and • misuse of information.
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