Abu Dhabi Securities Exchange proposes SPAC regulatory framework

The Abu Dhabi Securities Exchange (ADX) and Abu Dhabi’s Department of Economic Development (DED) have submitted a proposal to the Securities and Commodities Authority (SCA) to introduce a Special Purpose Acquisition Company (SPAC) regulatory framework.

The robust regulatory framework proposed by ADX and DED will reportedly facilitate initial public offerings of SPACs.

.@ADX_AE and @AbuDhabiDED have proposed the region’s first regulatory framework to list Special Purpose Acquisition Vehicles (SPACs). pic.twitter.com/CzKW32JQcz

— مكتب أبوظبي الإعلامي (@admediaoffice) November 9, 2021

The proposed regulations will also allow sponsors outside of the UAE to apply for approval to list their SPACs on the ADX.

The ADX and DED, in conjunction with legal and investment specialists, have worked together to produce the proposed SPAC regulations, assessing the regulatory landscape and benchmarking US and international SPAC regulations.

Following its review by the SCA, the SPAC proposal will require formal regulatory approval.

The proposal is the latest ADX initiative to utilise innovative financial tools and help investors capitalise on emerging opportunities. It reflects ADDED’s commitment to agile regulation that accelerates the emirate’s economic diversification and growth.

— مكتب أبوظبي الإعلامي (@admediaoffice) November 9, 2021

The market capitalisation of the ADX recently exceeded Dhs1.5 trillion, supported by a series of listings and increased international investment.

At the end of the first ten months of the year, the value of shares traded on the exchange reached Dhs284bn, while the foreign net investment reached Dhs6.1bn.

The benchmark Abu Dhabi General Index (ADI) increased by more than 61 per cent year to date.

“The introduction of SPAC regulations will further enhance our efforts to provide market participants with the widest range of investment vehicles and tools, including the recent introduction of a derivatives market platform. Over the past several months, the exchange has undertaken rigorous SPAC simulations, operational readiness tests, and the preparation of educational material for sponsors and investors. ADX is now fully prepared to field inquiries from sponsors and investors ahead of the proposal’s expected approval. In the meantime, we will continue to encourage the listing pipeline on the exchange and roll out more innovative investment tools as part of our efforts to enhance liquidity.”