ACC responds to DFSA call for evidence on private credit funds

Published: 13 May 2024

On May 10, the ACC responded the Dubai Financial Services Authority (DFSA)’s a Call for Evidence gathering insights on the Credit Fund regime, under the Collective Investment Rules (CIR) module of the DFSA Rulebook. Our response explores several ways that a regulatory framework can support the secure growth of private credit.

Our recommendations included:

  • Overall Approach to Private Credit Funds: We recommend that product specific rules are not necessarily required to create a secure regime for credit funds marketed to professional investors.
  • Investment Objective and Flexibility: We advise greater flexibility in fund composition, enabling investors to access private credit assets more aligned with their investment mandate.
  • Types of Credit Facilities: We recommend that credit funds be allowed to engage in a broader range of credit activities including international trade finance.
  • Leverage Limits: We suggest revisiting the current leverage constraints to better reflect the operational realities of private credit funds and the risk preferences of professional investors, aligning more closely with international practices.
  • Permitted Fund Structures: We support the inclusion of open-ended and evergreen fund structures in the regulatory framework, catering to both institutional and potentially retail investor needs.
  • Liquidity Management and Redemption Terms: We advocate for a principles-based approach to liquidity management that allows credit fund managers to tailor redemption terms and liquidity tools to their specific fund strategies and investor profiles.

For further information please contact Nicholas Smith ([email protected])