FSRA Prudential Rule Amendments: Strengthening Capital, Insurance, and Supervisory Oversight

The Riffle

On 19 August 2025, the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) published significant amendments to its Prudential Rulebook (PRU). These amendments, effective either immediately or from 1 January 2026, expand requirements on capital, professional indemnity insurance (PII), and supervisory review for a wide range of authorised firms.

These updates mark a major step in aligning ADGM with global prudential standards, ensuring that financial institutions operating in the centre maintain stronger buffers against risk and improved accountability mechanisms.

Key Highlights

1. Professional Indemnity Insurance (PII) Mandatory for Categories 3B, 3C, and 4 firms.

• Coverage must match the firm’s size, complexity, and risk profile.

• Must cover employee and governing body conduct, defence costs, and historic claims since authorisation.

• Firms must confirm adequacy annually and notify FSRA of significant claims or material changes.

• Group-wide policies allowed, but only if they fully meet FSRA conditions.

2. Revised Capital Requirements

• Capital must cover risks and absorb unexpected losses in line with Basel standards.

• Firms must meet the higher of:

  • Base Capital Requirement, or

  • Expenditure-Based Capital Minimum.

• Key changes:

  • Category 3C: $250,000 (with exceptions for fund management and fiat-referenced tokens, where $2,000,000 applies).

  • Category 4: $50,000 (up from $10,000), with higher thresholds for certain activities.

Liquid Asset Rule: Categories 3B, 3C, and 4 must maintain liquid assets exceeding their capital minimums.

3. Supervisory Review and Evaluation Process (SREP) Expansion

• Internal Risk Assessment Process (IRAP): Now mandatory for Categories 1, 2, 3A, 3B, 3C, and 5.

• Internal Capital Adequacy Assessment Process (ICAAP): Continues for Categories 1, 2, 3A, and 5.

• SREP: FSRA will review IRAP/ICAAP submissions across more categories, reinforcing supervisory oversight.

• FSRA may impose Individual Capital Requirements where existing capital is deemed insufficient.

4. Clarified Categories and Regulated Activities

Categories 3C and 4 expanded to include new activities such as:

• Issuing fiat-referenced tokens

• Operating private financing platforms

• Providing third-party services

This reflects ADGM’s push to regulate emerging sectors like virtual assets and fintech platforms more comprehensively.

What This Means for Firms

The FSRA’s amendments significantly raise the bar for firms operating in ADGM. Whether through higher capital requirements, mandatory insurance, or expanded supervisory oversight, the changes aim to create a more resilient and trustworthy financial ecosystem.

Firms must act now to:

• Review capital and liquidity buffers.

• Put in place compliant PII coverage.

• Prepare robust risk and capital assessment frameworks ahead of the 2026 deadlines.

These changes reaffirm ADGM’s commitment to maintaining a robust, transparent, and globally aligned financial centre.

Read the full briefing document by 10 Leaves here -