The Dubai Financial Services Authority has accepted seven new firms for inclusion in its cohort process, which permits them to apply for Innovation Testing Licences.

Innovation Testing Licences allow companies to apply for restricted financial services licences that let them test and develop 'innovative concepts' without being subject to the full panoply of regulatory rules. The DFSA, using slightly different nomenclature, has followed the example of the United Kingdom in its approach to start-up firms in the field of financial IT.

The ITL is the DFSA’s way of trying to develop software by letting successful applicants test their financial technology or FinTech in and from the Dubai International Financial Centre under certain conditions. The regulator received a wide variety of applications from firms that wanted to be part of the latest batch or 'cohort,' a term it borrowed from the UK's Financial Conduct Authority. The DFSA says that it 'launched' this cohort in November. Applications came from both the United Arab Emirates and abroad and covered green financing; the digitisation of bond and sukuk issuances using smart contracts; funding platforms for small-to-medium-sized businesses; robo-advisors for Islamic finance; and the tokenisation of equities and debt issuances.

Bryan Stirewalt, who recently took over as the chief executive of the DFSA, is particularly keen on Ethereum and Corda blockchains, artificial intelligence, algorithms and smart contracts. The cohort contains companies that aim to support government initiatives such as an environmental efficiency drive, support for SMEs throughout the UAE and the promotion of Islamic Finance. He is convinced that Dubai is "the regional Fintech hub."
 
Now that the DFSA has welcomed these firms into the cohort, it is inviting them to apply for ITLs. It expects to grant the first batch of licences in March.

The DFSA originally developed the cohort system in answer to the relative popularity of ITLs. It will continue to offer two open cohorts each year, during which time applicants should explain their business models and innovative proposals. Their next opportunity to apply to participate in a cohort will come in May.