Hong Kong and the United Arab Emirates have established a regulatory framework for cross-border fund distribution, marking the first mutual recognition arrangement between a Middle Eastern market and a jurisdiction outside the region.
The Securities and Futures Commission (SFC) and the UAE’s Securities and Commodities Authority signed the Memorandum of Understanding at the Investopia Global event in Hong Kong in September 2025. The agreement allows Hong Kong-domiciled funds to be offered directly to retail investors in the UAE, bypassing restrictions introduced in 2023 that prohibited the promotion of unlisted foreign funds to retail buyers.
What the deal covers
The Mutual Recognition of Funds arrangement creates a pathway for fund managers in both jurisdictions to distribute products across borders without duplicating regulatory requirements. For Hong Kong, the agreement expands its public fund distribution network into the Middle East for the first time.
“This significant collaboration with the SCA has opened a new chapter in Hong Kong-UAE regulatory cooperation,” said Julia Leung, CEO of the SFC. She described the arrangement as reaffirming Hong Kong’s role as “a premier gateway between Chinese Mainland and the Middle East.”
Waleed Saeed Abdul Salam Al Awadhi, CEO of the UAE regulator, called the partnership “a transformative milestone in redefining the global investment landscape” that would unlock “unprecedented opportunities for investors to engage with one of the world’s most advanced financial centres.”
Regulatory changes in the UAE
The partnership operates within a restructured regulatory environment in the UAE. Federal decree laws issued on 2 January 2026 formally established the Capital Market Authority as an independent body, succeeding the Securities and Commodities Authority.
The new legislation grants the CMA expanded powers, including authority to act as a resolution body during financial crises. The regulator can now dismiss and appoint management at failing institutions, restructure capital, and implement early intervention measures to protect clients.
Administrative penalties have also increased. The CMA can impose fines of up to ten times the profit realised by violators.
The decree laws explicitly link the CMA’s mandate to digital transformation and financial technology, establishing frameworks for consumer protection across digital channels. Both jurisdictions have stated an interest in developing standards for digital assets.
Strategic context
The agreement creates a new cross-border fund distribution channel between Hong Kong and the UAE. The UAE has launched national initiatives to establish the Emirates as a global financial centre.
A high-level bilateral meeting between the SFC and UAE regulators on 16 September preceded the formal signing. Both parties confirmed shared priorities around market access, investor protection, and financial innovation.
The SFC issued a circular on 17 September outlining technical requirements for funds seeking recognition under the new framework.
While the immediate focus is on traditional fund distribution, the regulatory infrastructure now in place could accommodate tokenised funds or digital asset-linked investment vehicles as both markets develop their fintech frameworks. The framework includes provisions for cross-border supervision and information exchange between the two regulators.
