Dubai Gives Hedge Funds Flexibility to Navigate Iran War Fallout

Dubai has drawn the world’s biggest hedge funds in recent years, transforming itself into a hub for the sector. Authorities are now moving quickly to shield that status, offering firms greater flexibility to navigate disruptions from the regional conflict.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Dubai has drawn the world’s biggest hedge funds in recent years, transforming itself into a hub for the sector. Authorities are now moving quickly to shield that status, offering firms greater flexibility to navigate disruptions from the regional conflict.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The tweaks are mostly aimed at cutting paperwork for investment firms as some staffers continue to work from home or other jurisdictions to which they temporarily relocated after the war began. As part of the changes, compliance requirements — typically tied to where a portfolio manager is licensed — are being eased by the Dubai Financial Services Authority, according to people familiar with the matter.The temporary measures will be evaluated on a case-by-case-basis, the people said, declining to be identified because they were discussing confidential information. Broadly, the goal is to allow risk-takers to operate from remote locations, easing operational constraints for hedge funds based in Dubai’s financial hub, they said.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The regulator has reached out directly to senior executives and is willing to provide additional support to firms where needed, one of the people said. Representatives for DFSA and the Dubai International Financial Centre declined to comment.Get the Mideast Money newsletter, a weekly look at the intersection of wealth and power in the region.An open-for-business approach, alongside tax advantages and access to capital, had lured hedge fund traders and firms to Dubai and neighboring Abu Dhabi in the first place. The likes of ExodusPoint Capital Management and Balyasny Asset Management have established operations in the region, though the conflict threatens this momentum.Both cities are part of the United Arab Emirates, which has borne the brunt of Iran’s retaliation for US-Israeli attacks on the Islamic Republic. In the early days of the conflict, some traders sought to leave the country, unnerved by shelter-in-place warnings and loud explosions. Still, the country has largely remained open, with businesses, shops and restaurants operating. A ceasefire announced last week prompted some finance professionals to make plans to return, though concerns remain over the impact to the UAE’s status as a safe haven.Against that backdrop, the DFSA unveiled relief measures last week across licensing, staffing, regulatory reporting, and implementation time-lines to support firms through what it described as an “exceptional operating environment.” The regulator declined to offer further details, though people familiar with the matter said firms awaiting licenses or regulatory approvals to operate in the DIFC hub will no longer be bound by strict deadlines. Reporting time-lines have also been extended, while upcoming regulatory changes that would require system or documentation upgrades have been deferred, the people said.Bhaskar Dasgupta, a board member of regulated funds across Dubai and Abu Dhabi, said the approach marked a notable departure from typical crisis responses, where the instinct is “usually to tighten.” “What the DFSA has done instead is calibrated, proportionate, and frankly quite sophisticated,” he said. “This is not a waiver. It is a structured pause. The standards remain. The timelines flex. That distinction matters enormously.”Maintaining regulatory credibility while absorbing wartime disruption could become a competitive advantage for Dubai as a financial center, he added.Tehran’s attacks on airports, energy infrastructure and hotels have weighed on the UAE’s status as a global economic hub and magnet for capital and talent. Yet, the crisis has also prompted a rare public show of support from major hedge fund firms.Millennium Management has explored relocation options for some staff but reaffirmed its commitment to Dubai.

Verition Fund Management plans to extend its local lease and expand, while Hudson Bay Capital Management has also signaled the UAE will remain core to its strategy.The latest measures build on a regulatory overhaul already underway, with the DFSA reviewing its slate of regulations with the goal of removing unnecessary regulatory burden and lowering barriers to entry.In neighboring Abu Dhabi, a spokesperson for ADGM said the financial hub remains in close contact with firms and stands ready to take “proportionate steps” if needed. For now, however, existing rules remain in place — meaning traders are generally expected to execute orders from within the jurisdiction, according to a person familiar with the matter.—With assistance from Alex Dooler.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.