ADGM, 9 April 2025: The Financial Services Regulatory Authority (FSRA) in the ADGM has issued a consultation paper proposing amendments to the prudential framework for lower-risk firms.

Consultation Paper No. 2 of 2025, targets Authorised Persons in Categories 2, 3A, 3B, 3C, and 4, as well as potential applicants and professional advisors. It has been proposed the Expenditure Based Capital Minimum (EBCM) requirement for Category 4 firms not holding Client Assets or Insurance Money should be removed, while increasing the Base Capital Requirement (BCR) for most Category 4 firms to $50,000. The FSRA has also suggested applying a BCR of $250,000 for Providing Custody for a Fund, unless it is a Public Fund, and removing the Internal Risk Assessment Process (IRAP) reporting requirement for Category 3B and 3C firms. There is also a proposal to eliminate the professional indemnity insurance (PII) requirement for Branches of Category 3B, 3C, and 4 firms. It is hoped the proposed changes would reduce the regulatory burden for these firms and better reflect the lower prudential risks associated with them. The closing date for comments on these proposals is 21 May 2025. The proposed amendments would modify the current prudential requirements under the FSRA’s Prudential – Investment, Insurance Intermediation, and Banking Rulebook (PRU).

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