The UAE Capital Market Authority’s New ATS Framework: A Landmark for Onshore Capital Markets Regulation

10 min 5 sec

Written by

Divya Abrol Gambhir

Partner

d.abrol@tamimi.com View LinkedIn Profile

Arina Gidwani

Of Counsel

a.gidwani@tamimi.com View LinkedIn Profile

The UAE Capital Market Authority (formerly the Securities and Commodities Authority) has introduced a comprehensive regulatory framework for alternative trading systems (ATS) through the Chairman’s Board Resolution No. (04/Chairman) of 2026 (CMA Regulation), which took effect on 13 February 2026.

The framework includes a dedicated ATS module as part of a broader package of regulations governing virtual asset service providers, and represents one of the most significant developments in the CMA’s regulatory architecture in recent years. It establishes a complete licensing regime for entities seeking to operate ATS in or from within the UAE, encompassing traditional financial products, tokenised securities, commodity contracts, and virtual assets.

This article examines the key elements of the new regime, its practical implications for market participants, and its place within the broader landscape of UAE financial regulation.

What Is an ATS under the CMA framework?

The ATS module defines the operation of an ATS as the operation of a multilateral trading facility (MTF) or an organised trading facility (OTF), thereby structuring the regime around these two trading models.

An MTF is defined as a system that matches buy and sell orders of multiple third parties in financial products based on non-discretionary rules, resulting in the conclusion of a transaction. An OTF, by contrast, operates on a discretionary basis in matching orders (subject to the regulatory framework governing the exercise of such discretion) and is intended to facilitate trading in illiquid or non‑equity financial products, as defined under the CMA framework.

This distinction between non-discretionary (MTF) and discretionary (OTF) execution broadly mirrors the taxonomy that will be familiar to practitioners accustomed to the EU’s Markets in Financial Instruments Directive II (MiFID II) framework and the Dubai Financial Services Authority’s (DFSA’s) Rulebook.

The scope of financial products eligible for trading on an ATS is notably broad, encompassing local and foreign securities, tokenised securities, commodity contracts, tokenised commodity contracts, virtual assets, derivatives contracts, and virtual asset derivatives.

The OTF, however, may not be used for trading and settling virtual assets; that restriction reserves virtual asset trading to MTFs. Furthermore, the OTF is framed under the ATS module as a venue for trading “illiquid or non-equity financial products”, which include government and corporate bonds, structured finance products (such as asset-backed securities and mortgage-backed securities), interest rates, credit and foreign exchange derivatives, carbon balances, and any other instruments approved by the CMA.

This delineation reflects a structural allocation whereby equity and virtual asset trading operates through non-discretionary platforms, while discretionary execution is associated with less liquid instruments.

Licensing: A two-stage process

The ATS module introduces a two-stage licensing process. The first stage is an ‘in principle approval’, requiring the applicant to demonstrate financial eligibility, relevant experience and competence, honesty and integrity, compliance with applicable legislation, a clean regulatory record, a realistic three-year business plan, and adherence to the legal form specified by the CMA. The CMA must decide within 45 working days. The ‘in principle approval’ is not itself a licence; the applicant must fulfil the ongoing requirements within six months (extendable once) to obtain its formal licence.

The second stage is the formal licence. The CMA may verify the applicant’s financial resources, solvency, competence, the suitability of its board members and controllers, and its ability to comply with regulatory requirements, and must decide within 60 working days. The CMA retains a broad public-interest discretion to attach conditions or reject an application. Capital market institutions already licensed by the CMA may apply for an approval (rather than a new licence) to add ATS activities.

Operational and governance requirements

Organisational structure and key persons

A licensed ATS operator must establish an organisational structure that is suitable and capable of meeting licensing requirements, with adequate human resources and expertise. The entity must at all times have persons appointed to perform certain roles, including board members (or their equivalents), a senior manager, a senior executive officer, a chief financial officer, a compliance officer, a money laundering reporting officer, a risk officer, and an internal auditor.

Some of these positions — the senior manager, chief executive officer, compliance officer, and money laundering reporting officer — must ordinarily be performed by persons residing in the UAE. However, an exception exists for the senior manager, where effective internal controls and direct communication channels with the CMA are in place.

Financial resources and technology

The licensed entity must maintain financial resources commensurate with the nature, size, and complexity of its business at all times. Assets held to meet these requirements must be of high quality and sufficient liquidity, and cash must be held in a licensed bank within the UAE.

On the technology side, the entity must provide sufficient technological resources to operate, maintain, and supervise its facilities, including pre-operational testing aligned with internationally recognised standards, issue management, change management, system monitoring, and business continuity arrangements. A dedicated obligation requires compliance with the CMA’s cybersecurity risk-management standards.

Business rules, public consultation, and market conduct

A distinctive feature of the CMA’s ATS framework is the requirement for licensed entities to establish and maintain publicly available business rules covering membership admission, financial product acceptance, default, and general operational standards. These rules must be objective, clear, fair, unbiased, legally binding, and enforceable on members and participants, and must include dispute resolution and disciplinary provisions.

Any amendment to the business rules is subject to a mandatory public consultation of no less than 30 days, a requirement that is atypical for trading venue regulation globally and signals the CMA’s commitment to stakeholder engagement and transparency. The consultation paper must be submitted to the CMA prior to publication, and the CMA may extend the consultation period.

After consultation, the licensed entity must submit a summary of public comments and any resulting changes before the amendment can take effect. The CMA’s approval is required for all rule changes to become effective.

Exemptions from public consultation are available, but only on narrow grounds — for instance, where delay would harm the entity’s interests, or where an amendment is purely administrative or non-material.

Notable and distinctive features of the ATS regime

Several aspects of the CMA’s ATS module stand out as particularly novel or noteworthy when measured against established regulatory frameworks elsewhere.

Integrated virtual asset and tokenised securities provisions

The ATS module dedicates two full chapters to the operation of ATS platforms for digital assets. These chapters impose additional requirements around distributed ledger technology (DLT) governance, including that any distributed ledger used by the facility must operate on a permissioned basis, with the licensed entity maintaining sufficient control over access. The standards extend to interoperability, scalability, data protection, and compliance with applicable legal requirements.

The inclusion of detailed DLT governance requirements directly within the ATS framework (rather than in a separate, standalone regime) represents a deliberate choice by the CMA to embed digital asset trading within the same regulatory ecosystem as traditional financial product trading.

Direct participant access 

While access to an ATS is centred on membership, the module expressly recognises ‘direct participants’ (natural or legal persons, other than licensed entities, who may access the facility directly for trading), enabling certain users to access trading facilities without relying on traditional member-based arrangements.

The regime surrounding direct participants imposes extensive obligations on the licensed entity, including due diligence, AML/CFT controls, fraud and market manipulation monitoring, collateral management, and the requirement that direct participants may not grant others access to trading. This approach reflects the reality that digital asset markets frequently involve participants who do not fit the traditional intermediated model.

Annual technology audit report

For both tokenised securities and virtual asset MTFs, the module mandates an annual technology audit by an independent, qualified external auditor, who must assess the licensed entity’s compliance with all applicable technology and governance requirements and produce a written report to be submitted to the CMA within four months of the end of the financial year. This is a meaningful ongoing supervisory tool not commonly seen in traditional trading venue regulation.

Risk warnings and virtual asset information disclosure

The module imposes a prescriptive set of risk warnings for virtual assets, including warnings on volatility, potential total loss of investment, liquidity risks, complexity, and vulnerability to cyberattacks. These warnings must be prominently displayed on the operator’s website and in all marketing or educational communications.

Operators of virtual asset MTFs must also ensure the availability of a ‘key characteristics document’ for each virtual asset and comply with detailed ongoing information requirements, including disclosure of total supply, distribution, and major holders.

OTF restriction to illiquid and non-equity products

The restriction of OTFs to illiquid or non-equity financial products, and the express prohibition on using an OTF for virtual assets, is a clear structural choice. It ensures that equity and virtual asset markets operate under non-discretionary matching rules, while allowing the benefits of discretionary execution only for instruments where liquidity conditions justify operator intervention.

Significance for UAE capital markets

The introduction of the ATS module represents a maturation milestone for the CMA as a regulator. Until now, the onshore UAE capital markets framework lacked a dedicated, self-contained regime for alternative trading venues. The new framework fills this gap by creating a clear pathway for licensed entities to operate trading venues that are distinct from traditional exchanges (such as the Dubai Financial Market or Abu Dhabi Securities Exchange), but subject to proportionate regulatory oversight.

The breadth of financial products covered, from conventional securities and derivatives to tokenised instruments and virtual assets, signals the CMA’s ambition to position the onshore UAE as a jurisdiction capable of supporting sophisticated and emerging market structures. The framework’s integration of traditional and digital asset regulation within a single module avoids regulatory fragmentation and provides market participants with clarity on how both conventional and novel instruments will be governed.

The issuance of the CMA Regulation under the new Federal Decree-Law No. 32 of 2025 Concerning the Capital Market Authority and the Federal Decree-Law No. 33 of 2025 Concerning the Regulation of the Capital Market further underscores the legislative modernisation underway in the UAE’s financial services landscape.

The CMA Regulation repeals prior, narrower regulatory provisions, including the Chairman’s Decision No. 26 of 2023 on the Virtual Assets Platform Operator, and replaces them with a more comprehensive package. Licensed entities and their employees have a one-year transition period to comply with the new  and ATS module requirements.

Comparison with the DIFC and ADGM regimes

Both of the UAE’s financial free zones, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), have established regulatory frameworks for ATS. In the DIFC, the DFSA regulates the operation of MTFs and OTFs under its general module, using definitions conceptually aligned with, and broadly comparable to, those now adopted by the CMA. In the ADGM, the Financial Services Regulatory Authority (FSRA) similarly regulates trading venues under the Financial Services and Markets Regulations 2015.

A notable feature of both free zone regimes is the concept of a ‘recognised body’ or ‘remote investment exchange’, which allows foreign exchanges and trading venues to provide direct access to participants located within those jurisdictions without the need for a full local licence, subject to meeting recognition criteria and entering into cooperative arrangements with the home regulator.

The CMA’s regime, by contrast, focuses on the licensing of entities that operate ATS platforms “in and/or from within the State”, rather than providing an equivalent cross-border recognition pathway for foreign venues, a distinction that market participants considering entry into the onshore UAE market should note.

Conclusion

The CMA’s ATS module is a comprehensive, thoughtfully structured regulation that brings the onshore UAE into closer alignment with international best practice in trading venue regulation, while incorporating forward-looking provisions for digital assets and DLT. Its two-stage licensing process, detailed governance and technology requirements, and mandatory public consultation regime for rule changes reflect a regulator that is building for both institutional credibility and market innovation.

The explicit integration of tokenised securities and virtual assets within the same regulatory architecture as traditional financial products is a distinctive feature that differentiates the CMA’s approach from many of its international peers. Market participants, whether existing licensed entities looking to add ATS activities or new entrants considering the UAE onshore market, should begin assessing the framework’s requirements promptly, given the one-year transition timeline.