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The DIFC enacted the Markets Law in 2012, which took effect on July 5th of that year. Part 6 of this law outlines prohibitions against market abuse. For more detailed information and guidance on this topic, consult the Code of Market Conduct (CMC). It’s important to note that the CMC provides indicative and non-binding guidance and is not comprehensive.

Khairallah Law Firm is a leading Dubai financial law firm with extensive experience in advising clients on a wide range of financial regulatory matters, including market abuse.

Illegal Market Activities: A Dubai Financial Perspective

Market abuse includes a variety of nefarious activities such as fraud, market manipulation, misleading statements and conduct, deception, and insider trading. These actions then serve to besmirch and distort the integrity of markets by creating irregularities in price formation and more optimistically providing an advantage to only select market participants.

These activities need to be banned, and investors need protection because these practices can cause serious damage to markets and innovation. Market abuse regulation is critical to establishing and maintaining a sustainable Dubai financial market, which further underscores the importance of the role played by the Dubai Financial Regulator in monitoring and enforcing compliance with regard to these regulations.

The High-Stakes Game of Market Manipulation

According to Article 49(a) of the CML, no one may deliberately undertake an act that aims to create an illusion regarding a Security such as its market, price, or value. In order to protect against market manipulation and influencing third parties into making decisions regarding investment based on information that is not true, such conduct is prohibited

Likewise, Article 49(c) of the CML which is also further elaborated by the CMA’s MCR prohibits certain acts as manipulative practices. These may be transactions that do not constitute an actual transfer of ownership, and so on.

It is important to ensure that the integrity of the Dubai Financial Market, its prime importance within the regional economy, and consistency with enforced regulations on market abuse are maintained.

The High Cost of Market Abuse: Legal Risks in the Dubai Financial Sector

Article 57 of the CML packs a serious punch for anyone caught manipulating the market in Dubai, UAE. If you’re found guilty of manipulating securities prices and hurting investors, you could face hefty fines or even up to five years behind bars. That’s a pretty steep price to pay to try to game the system.

It’s clear that the Dubai UAE government is serious about keeping its financial markets fair and transparent.

Navigating the Legal Landscape of Insider Trading in the UAE

Insider trading? Think of it as stealing secrets from the stock market. It’s illegal and can land you in serious trouble.

In the UAE, the Securities and Commodities Authority (SCA) is the watchdog keeping a close eye on the market. They’re not messing around when it comes to insider trading. If you’re caught using non-public information to make a profit, you could face hefty fines and even jail time.

In this article, we’ll break down the rules and regulations around insider trading in the UAE. We’ll also explore the potential consequences of getting caught.

The UAE government is committed to creating a safe and secure environment for investors while ensuring that the financial markets remain fair. They made draconian laws against insider trading.

That brings us back to what insider trading is. That means that one person is using secret information to purchase or sell stock before the public knows it. They can’t help but have the upper hand this way.

The UAE financial regulator is the Securities and Commodities Authority (SCA). So guise beware, insider trade is a serious crime that will bring you to jail or you will have to pay a big amount.

It’s a dangerous game, and not worth the trouble.

dubai financial

Key Points on UAE Cryptocurrency Regulation

1. Robust Regulatory Regime:

  • Cabinet Decision No. 111/2022 provided an overarching framework for virtual assets and the entities that provide services in relation to them. 
  • Main Regulator: Securities and Commodities Authority (SCA)

2. Licensing Requirements:

  • All entities carrying out virtual asset activities (e.g., trading, custody) require a license from the SCA or relevant local licensing law authorities.

3. Regulatory Competencies:

  • It also supervises crypto-related activities, protects data, and implements AML.

4. Compliance Requirements:

  • Service providers must strictly follow UAE AML laws and international standards.

5. Dubai Virtual Assets Regulatory Authority (VARA):

  • Cabinet Decision No. 112/2022 delegated certain regulatory powers to VARA. 
  • VARA licenses and supervises virtual asset activities within Dubai and its free zones. 
  • VARA ensures compliance, protects investors, and handles grievances.

6. Investor Protection and Market Integrity:

  • The regulatory framework prioritizes investor protection and market integrity. 
  • Strict penalties are imposed for violations of regulations.

7. Future Outlook:

  • The UAE’s proactive approach positions it as a global hub for cryptocurrency innovation and investment. 
  • Continued regulatory developments are expected to further shape the industry’s landscape.

Conclusion

Robust Laws Against White-Collar Crimes: The UAE has introduced strict laws prohibiting white-collar crimes such as market manipulation and insider trading.

Market Integrity —The government by definition is in the market with bond insurance and this proposal would ensure fair markets through transparency.

Stiff Penalties: Those who are guilty of market abuse and insider trading receive heavy penalties, including imprisonment as well as substantial fines.

Main Regulatory Bodies: SCA (Securities and Commodities Authority) and VARA (the Dubai Virtual Assets Regulatory Authority), regulate the financial sector as well as the cryptocurrency space.

Protection of Investors: The regulatory framework has been created with the focus of protecting investors and creating trust in the UAE’s financial ecosystem.

What you need is to have next to you one of the best lawyers in Dubai, who is up to date, and knows how to address your needs efficiently and effectively.

Contact Khairallah Advocates & Legal Consultants and benefit from our free 30-min legal consultation.

*Disclaimer: our blogs, law updates, and FAQs are freely distributed for educational purposes and to showcase recent updates and regulations in the UAE’s framework.

If you have any questions and need assistance, contact us at our number or book an appointment online.

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