Abu Dhabi’s Global Market Financial Services Regulatory Authority has announced it has issued new digital investment manager or robo-advisor regulations. These advisors or managers provide investment management services using algorithm-based tools and technology.
The Regulations cover the regulatory permissions which may be required to provide digital investment services in or from the Global Market and how the Financial Services Regulatory Authority will apply its authorisation criteria in technology governance, suitability and disclosure and newer areas like algorithm governance. The Authority’s requirements on algorithm governance, are closely calibrated to match international best practices and incorporate principles of fairness, transparency and accountability. These include requirements for human oversight over the design, performance and security of the algorithm model, ensuring the algorithm model is not affected by possible behavioural biases, adequate safeguards to protect the integrity of the algorithm model and ensuring the outcomes produced by the algorithm model are explainable, traceable and repeatable.
The Authority will allow digital investment managers to hold lower prudential capital if they meet the stipulated criteria and requirements.