The latest set of regulations on fund transfers issued by the Securities and Commodities Authority (SCA) last month is a welcome move — although long overdue — as the country has already been attracting large investments, some of which have been channeled through investment funds.
Investment is a risky business and fund management is a tricky one. Many investors have accused fund managers of mismanagement and cheating. When markets decline or things go wrong, investors lose money and faith, shattering their confidence. The latest fund scams in the West, especially the Madoff and Stanford cases, made it worse. Some UAE investors too have lost money in the Madoff scam. Strict regulations and strong vigilance could reduce such incidents.
Dubai had already become a hub of financial services, following the establishment of the Dubai International Financial Centre in 2005, where a large number of investment banks and fund managers opened offices to tap the growing opportunities. Besides, the Gulf region is host to a large number of wealthy individuals and families with high disposable income. Their wealth could be channelled through new investment funds that could help create more wealth and employment. These funds could be deployed in the sectors that need investment, and help the economy.
So, the fund management market needed a proper set of directions. The SCA’s latest move will help regulate fund development, management, transfer and increase transparency and accountability of the fund managers, to ensure that none can walk away with other people’s money.
