The Dubai Financial Services Authority has issued a feedback statement on CP161 and published final amendments to its Rulebook to make prudential requirements more proportionate for a large subset of Authorised Firms in the Dubai International Financial Centre, with a phased commencement on 1 July 2025 and 1 July 2026. Key changes include removing the Expenditure Based Capital Minimum (EBCM) from 1 July 2025 for firms that do not hold Client Assets or Insurance Monies and are not safekeeping Fund Property, while maintaining for prudential category 3 firms a requirement to hold liquid assets at least equal to the Base Capital Requirement (BCR). The liquidity framework also expands eligible currencies for high-quality government bonds (countable up to two-thirds of the liquidity requirement) to include GBP and EUR alongside USD and AED, while excluding exchange-traded funds and securitisations. From 1 July 2026, an Activity Based Capital Requirement (ABCR) applies to specified category 3 business models, and the overall capital requirement is clarified as the highest of the BCR, EBCM (where applicable) and ABCR; where multiple Financial Services are licensed in the same prudential category, the BCR is the highest BCR allocated to those services. The reforms also move Dealing in Investments as Matched Principal from prudential category 3A to category 2 (while carving such firms out of certain category 2 requirements including the capital conservation buffer, leverage ratio and interest rate risk in the banking book), remove IRAP/ICAAP requirements for category 3 (with DFSA retaining powers to impose firm-specific capital or liquidity requirements), and adjust Professional Indemnity Insurance by removing mandatory cover for firms that will be subject to ABCR while shortening the required cover period (where PII applies) to four years. Implementation is split so burden-reducing measures apply from 1 July 2025, while new requirements such as ABCR and the revised PII rules apply from 1 July 2026, with the DFSA noting some firms may see a temporary reduction in overall capital requirements during the transition. The DFSA will publish EPRS templates and instructions for ABCR reporting, with returns becoming mandatory for Q3 2026 submission, and it signalled a future review of the prudential regime for category 2 firms.

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