The Dubai Financial Services Authority has made various changes to its rulebook, including one to its prospectus rule.

The 'General Module' (GEN) of the rulebook has been updated to sharpen the distinctions between activities that are and are not 'financial services' for the purposes of regulation. Rule 2.2.2 contains the list, with the taking of deposits at the top. Another item is dealing in investments as principal, i.e. buying, selling, subscribing for or underwriting any investment as principal. Rule 2.7.4(1) says that a person who is not an authorised firm or an authorised market institution does not deal in investments as principal in relation to an investment by performing a transaction with or through an authorised firm or a regulated financial institution. Rule 2.7.4(2), however, now says that this exclusion does not operate if the firm holds itself out as (a) willing to enter into transactions in investments of the kind to which the transaction relates or (b) engaging in the business of buying, selling, subscribing for or underwriting investments.

The exclusion in Rule 2.7.4 is intended to apply, for example, to a person who executes proprietary trades through a duly authorised broker, or to a person who is carrying on a commercial business and enters into a transaction with a firm for a purpose related to that business, such as to hedge a risk. It does not apply to a person that holds itself out as willing to enter into transactions relating to investments of that kind or as engaging in the business of dealing in investments, such as a market maker or an online trading platform operator (even if it enters into transactions only with authorised firms or regulated financial institutions).

A firm is judged to "hold itself out" if it makes a statement on one of its webpages, in an advertisement or through representations made by its staff. The mere placement of orders with a broker or on a market will not amount to holding out.

In the DFSA's 'markets rules' (MKT) the regulator implies that it is about to ask banks, securities houses and/or fund firms to put more information into their prospecti. 'Exempt securities' are, as before, securities  already admitted to trading on another authorised market (i) the securities have been traded there for 18 months; (ii) they have been traded compliantly; and (iii) the person asking for their admission to trading under this exemption makes a summary document (prospectus) containing the many types of information set out in Rule 2.5.2(1)(b). The DFSA has amended this to say "and such other information as the DFSA may require."

'Purchase of own shares' is dealt with in section 9.7.4, which says that a listed entity cannot purchase its own shares without DFSA approval. To obtain this, it might now have to do two things for which the DFSA could not previously ask. It now has discretion to ask the firm to publish details of the mechanism that it wants to use to carry out the share repurchase and, if the repurchase is to take place on the open market, it can require it to ensure that transactions are carried out at arm's length.

Rule 2.1.2(1) says that an application to operate a representative office in the Dubai International Financial Centre, which the DFSA regulates, may only be made by a body corporate that is regulated by a Financial Services Regulator in a jurisdiction other than the DIFC. This has evidently been a source of some worry to the DFSA, because it has added a fragment of 'guidance' to the effect that if the applicant is merely subject to some sort of registration and not 'proper' oversight, this will not do.   

There has also been a minor change to pricing limits in the price stabilisation module (PRS). The provision of trust services no longer attracts a fee US$25,000 unless the company in question is acting as a trustee of one or more express trusts. There is now, however, a fee of $15,000 to be paid if it is providing trust services but not acting as such a trustee. This  does not affect any annual fee that has already been paid. In its glossary, to please the Financial Action Task Force which sets the world's anti-money-laundering standards, the regulator has renamed ancillary service providers as DNFBPs or designated non-financial businesses or professions. An 'eligible security' is no longer merely a share, debenture, certificate over a share or debenture or a warrant over a share or debenture; it can now also be a unit that is a share representing the rights or interests of a unitholder in a fund.