The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market, today published a discussion paper setting out its proposed regulatory framework for operators of financing platforms for non-public companies (Private Financing Platforms or PFPs).

According to the paper, private enterprises, including start-ups and small and medium-sized enterprises (SMEs), are key engines of economic growth and diversification in the region, but they are an underserved segment in terms of financing needs. The FSRA therefore considers it important to develop alternative financing solutions for them to bridge the commercial funding gap and ease cashflow issues.

In this regard, the paper added, PFPs can play an important role in improving access to financial services and developing financing ecosystems for start-ups and SMEs seeking to launch and grow their businesses, as well as spurring innovation and enhancing competitiveness in these sectors. "PFPs can serve a wide, private market landscape from very early stage to pre-IPO stage companies," it said.

The paper continued, "FSRA is proposing a calibrated, risk-appropriate regulatory framework (the PFP Framework) for PFPs that would facilitate access by start-ups and SMEs to new, alternative sources of funding primarily from Professional Clients, while applying the necessary regulatory safeguards to ensure that they operate in a safe and sound manner for those clients."

The proposed PFP Framework serves to promote FSRA’s continued objective in developing a stable and sustainable financial services sector in Abu Dhabi and the UAE, while fostering innovation within risk-proportionate regulatory safeguards.

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