GCC Introduces New Framework on Fund Passporting

A new framework has been introduced by the financial markets of a Gulf Cooperation Council (GCC), to streamline fund passporting that integrate & strengthen the position of GCC financial markets in the global investment landscape. During the 29th meeting of the GCC committee, this new regulatory framework initiative was approved, fostering an integrated financial ecosystem across the GCC member states. 

This fund passporting framework is expected to become operational in early 2025, which will streamline the registration process and advancement of investment funds across the member states, enhancing seamless cross-border financial activities.

Fund managers, investors and financial organizations will majorly benefit from this new initiative, as it enables them to launch investment funds in one GCC state as well as market and distribute the funds in other member states.

Hence it unlocks a plethora of opportunities by reducing the systemic complexities. Moreover, the implementation of this fund passporting framework creates a milestone for GCC’s holistic strategy of enhancing financial sustainability, attracting investment and improving the economic resilience of the market.

Notable Aspects of Fund Passporting Draft Regulation

The fund passporting draft regulations of the GCC are expected to create a paradigm shift in the financial landscape in the region, by establishing a unified framework for investment funds. Through the implementation of this framework, transactions of investment funds across member states will be simplified and promote hassle-free cross-border investments. 

Here are some of the key features of this Fund Passporting Draft Regulation:

Unified Registration Process

This framework facilitates the fund managers with the regulatory processes aligned for registration and promotion of investment funds across the member states of the GCC. The fund managers do not have to worry about following a different set of regulations for investments in each member state. 

Streamlined Procedures & Feasibility

The procedures for investments across the member states of GCC has been simplified and streamlined, making it more accessible and feasible for the fund managers & investors and reduces administrative burdens. 

Robust Governance & Transparency 

The regulation enforces strong governance and transparency mechanisms, ensuring investment funds and cross-border operations comply with ethical standards and methods. The regulations cover liabilities for fund managers, investors and promoters, fee regulation procedures and governance standards aimed at protecting investors.

High Standards of Compliance & Protective Measures

The fund passporting framework focuses on protecting the rights of unit holders and the draft regulation clearly explains the compliance standards, provisions for the fund’s deregistration and fund oversight procedures.

The Impact of the GCC Fund Passporting Framework

To combat the increased competition in the global financial landscape, the GCC’s initiative of this adoption of fund passporting framework contributes to withholding its position as a top-tier investment destination. Moreover, it addresses the challenges of investors and fund managers operating across multiple GCC member states by providing streamlined access to investment funds across regional markets, boosting investment opportunities and improving economic integration thereby giving a competitive edge to the GCC.

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