The Capital Markets Authority (CMA) in the United Arab Emirates (UAE) has introduced new risk warnings on its website for firms holding Category 5 licenses. Users accessing the CMA's registry now see a pop-up warning when they visit the page of a Category 5 license holder.
According to the warning, firms with a Category 5 license are only permitted to undertake marketing and introducing services. The notice further clarifies that these firms are not allowed to provide a range of financial services, including dealing in derivatives and FX products. TradeInformer reviewed several providers with a Category 5 license and reported that the pop-up appeared for all of them, and must be closed before the firm's registration details can be viewed.
In a parallel step, the CMA has also added several Category 5 license holders to its public warning list. Public warning lists are typically used by regulators to highlight firms that are not operating with an appropriate license and to protect consumers from unregulated entities. Over the past month, the CMA has added Naqdi and Mohican Markets to its warning list, despite both firms being regulated by the CMA with Category 5 licenses.
The warnings published for Naqdi and Mohican Markets closely mirror the language used in the registry pop-ups. They emphasise that these firms are limited to marketing and introducing services and are not permitted to provide broader financial services. This approach indicates a stricter communication by the regulator regarding the scope and limitations of Category 5 authorisations.
Market participants have linked these actions to rumours that changes may be forthcoming to the Category 5 licensing regime. A large number of firms reportedly hold a Category 5 license in the UAE while relying on separate licenses in jurisdictions such as Seychelles or Mauritius to onboard clients. In many cases, the client onboarding process provides little clarity to end users about which jurisdiction is actually responsible for their account.
The CMA's recent measures highlight the regulator's focus on clarifying the permitted activities of Category 5 license holders and on drawing public attention to the limits of these firms' authorisations. The combination of registry pop-up warnings and inclusion on the public warning list signals a more visible stance on the risks associated with misunderstanding the scope of Category 5 licenses.
