Financial Services Permission (FSP) – FSRA
What are the ADGM & FSRA and what do they do?
The Abu Dhabi Global Market (ADGM) is the financial-free zone of Abu Dhabi and an international financial centre, globally recognised for its pioneering and business-friendly ecosystem. The Financial Services Regulatory Authority (FSRA) is one of ADGM’s three independent authorities, tasked to support and supervise all financial activities. Together ADGM and FSRA operate in line with international best practices, promoting Abu Dhabi’s economic and financial growth.
Why establish a financial services firm in Abu Dhabi?
A financial services firm established in Abu Dhabi benefits from:
- Abu Dhabi’s strategic location with favourable geographic distances and time zone differences between international financial markets.
- Low operating expenses and a sophisticated skilled workforce.
- Attractive tax benefits including zero corporate income tax, no limits on profits repatriation, no withholding taxes and UAE’s wide range of double tax treaties.
- Connectivity to the Middle East, Africa, Europe, and Asia.
- Regulations and rules developed on the grounds of the English Common Law.
- Great political and economic stability.
Regulated Activities
Each license category prescribes specific regulated activities with the FSRA allowing the addition of regulated activities included in higher license categories subject to additional fees.
The Financial Services Permission (FSP) license categories relating to the provision of investment services are Category 2, Category 3A and Category 4, as per the below table.
| License Category | Regulated Activities |
|---|---|
| Category 2 | • Dealing in Investments as Principal; Not as a Matched Principal. • Providing Credit. |
| Category 3A | • Dealing in Investments as Principal; Only as a Matched Principal. • Dealing in Investments as Agent. |
| Category 4* | • Arranging Credit. • Arranging Deals in Investments. • Arranging Custody. • Advising on Investments of Credit. • Operating a Multilateral Trading Facility or Organised Trading Facility. • Operating a Private Financing Platform. • Operating a Representative Office. |
*This is a non-exhaustive list of the services a Category 4 license can provide, with the selection presented focused on FSP intending to offer investment services.
Regulatory Capital Requirements
Minimum regulatory capital requirements vary between the different license categories and whether specific regulated activities are to be included within the FSP license.
| License Category | Capital Requirements |
|---|---|
| Category 2 | Higher of: • 2,000,000 USD • Risk Capital Requirement • Expenditure Based Capital Minimum |
| Category 3A | Higher of: • 500,000 USD • 2,000,000 USD if dealing as matched principal in Over-the-Counter Derivatives with retail clients • Risk Capital Requirement • Expenditure Based Capital Minimum |
| Category 4 | Higher of: • 10,000 USD • 150,000 USD if operating a Private Financing Platform and holding Client Assets • Expenditure Based Capital Minimum |
Application Fees
The application fees are comprised of the FSRA authorisation fee for acquiring an FSP license, and the ADGM registration fee for the establishment of a legal entity. The FSRA authorisation fee varies depending on the different category of FSP license to be obtained and the number of additional regulated activities to be included. The ADGM registration fee is independent of the type and number of regulated activities to be included in the license.
Annual Fees
The annual fees are comprised of the FSRA supervision fee for the extension of the FSP license, and the ADGM renewal fee in respect to the continuance of the legal entity’s operations. Again, the FSRA supervision fee varies between the different category of FSP license, and the number of additional regulated activities included. The ADGM registration fee remains independent of the type and number of regulated activities.
Licensing Timeframe
The review and in-principle approval of Category 2, Category 3A and Category 4 standard applications, require 6 to 10 weeks after the submission of the application and payment of fees. This may differ depending on the characteristics of the suggested business model and the FSRA’s varying workload. Considering that the in-principle letter is valid for three months, the FSRA grants the Financial Services Permission as soon as the applicant completes all the instructed preconditions.
Obtaining an FSRA Category 2, Category 3A, or Category 4 license with SALVUS
The SALVUS Investment Firms Licensing team utilises an effective project management framework in dealing with licensing projects. We apply our extensive experience and expertise and work closely with our clients and their team to select the investment and ancillary services that complement their business plan.
We initially introduce you to the regulator, we collect all the required information and complete all the necessary documentation, ensuring the submission of a well-supported application. We further support the cost-efficient allocation of your financial resources through the optimal combination of employees, outsourcing arrangements, and third-party providers.
Do not hesitate to contact us at info@salvusfunds.com to request more information from our Investment Firms Licensing team or discuss your licensing needs. We look forward to working together and being of value.
