Upgrading of the UAE to ‘emerging markets’ status by MSCI is completed
SCA is amending Federal Law on the Emirates Securities and Commodities Authority
Technological innovation continues to be a competitive factor for financial services
MENA compliance officers have to achieve a better communications with regulators
MENA regulators have to continue promoting financial services and enhance efficiency
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today inaugurated the 10th Gulf Cooperation Council (GCC) Regulators’ Summit in Abu Dhabi, United Arab Emirates.
The event, set to take place on 25 & 26 January, 2016, at is held in association with the Abu Dhabi Global Market (ADGM) and under the patronage of the UAE Minister of Economy, H.E Sultan bin Saeed Al Mansouri.
Ibrahim Al Zaabi, Director General of Insurance authority, delivered the keynote speech on behalf of the UAE Minister of Economy, H.E Sultan bin Saeed Al Mansouri. “Last year, the UAE’s second market was inaugurated to list the shares of private joint-stock companies, as well as to enforce companies to implement the electronic disclosure system (XBRL). The UAE also ranked first globally on the Corporate Board Effectiveness Index (BEI) according to the World Competitiveness Yearbook 2015,” he added.
With regard to the stock markets, Mr. Al Zaabi pointed out that the upgrading of the UAE to ‘emerging markets’ status by MSCI has also been completed, translating a positive impact on the economy in general with the increase in foreign direct investment flows and greater international interest in the UAE’s shares and securities.
According to statistics on the performance of GCC financial markets, the combined trading value for 2014 reached approximately US$797.3 billion, while the total volume of shares traded in these markets for the same period stood at US$140.8 billion in securities. Market value registered US$1.04 trillion by the end of 2014.
The UAE has achieved high economic growth rates across key sectors. According to estimates, the UAE economy grew at the rate of 4.5% in 2014. The UAE has also ranked high internationally on varied competitiveness indices.
Speaking about the strategy of the Emirates Securities and Commodities Authority (SCA), Mr. Al Zaabi noted that SCA is working to amend the Federal Law on the Emirates Securities and Commodities Authority and Market to regulate the relationship between competent bodies involved in the financial services sector in the UAE.
He pointed out that foreign direct investments received another boost with the GCC countries adopting an economic policy to diversify sources of national income. Currently the GCC economies can absorb many investments – particularly those focused on energy and information technology.
Ahmed Al Sayegh, Chairman, ADGM, said: “The GCC had made intensive efforts to push ahead, and invested in areas and initiatives for the long-term sustainability of its economies and people. The GCC region have harnessed tangible results such as GCC exports to India which increased by 43% annually over the last decade, while the growth of GCC’s exports to Asia has surpassed that to the rest of the world.
“The UAE has introduced several successful initiatives and efforts to ensure long-term financial stability and growth. Going forward, Technological innovation will continue to be a competitive factor for financial services in 2016 and beyond. Already, we see a global debate emerging concerning the appropriate regulatory response. Regulators will be concerned to facilitate innovation and how to regulate this space to meet the overarching objectives of stability, market integrity and investor protection,” he noted.
Mr. Al Sayegh pointed out that regulatory attention has been directed at the behavior of financial institutions and their staff with respect to consumer and investor protection. “Significant supervisory expectations concerning conduct and culture will weigh on financial institutions through 2016,” he said.
Nadim Najjar, Managing Director, Middle East and North Africa (MENA), Thomson Reuters, said: “Whilst the last 10 years have seen a significant regulatory activity challenging financial institutions, it has also seen a leap forward in terms of international and regional regulators coming together and co-operating with each other in order to weather a global recession, mitigate risks, and try to ensure that mistakes of the past are not relived.”
Mr. Najjar noted: “In order to achieve enhanced confidence on all levels, MENA compliance officers have to achieve a better communications with regulators, present a compelling case for senior executive commitment, roll out training from the top down, hold regular monitoring and audits of compliance programs and create frequent communication.”
Speaking at the first panel session on MENA’s evolving regulation, Ian Johnston, Chief Executive Officer, Dubai Financial Services Authority, said: “We managed to grow a solid regulatory ecosystem in the past ten years and we continue to keep an eye on the emerging international trends through both cooperation and consultation. We have maintained a formal and informal consultation dialogue with the market stakeholders and today we are focused on being responsive to the risks that emerge as the world continues to change.”
Richard Teng, Chief Executive Officer, Abu Dhabi Global Market Financial Services Regulatory Authority (ADGM FSRA), said: “Demographics around the world are changing and there is a need for more financial market intermediation. MENA regulators have to continue promoting financial services and enhance the efficiency of financial markets. Developing local talent is a strategic vision that we have embraced in order to create the right future leadership and expertise.”
Commenting on localizing international standards, Ebtisam Al Arrayed, Head-Regulatory Policy, Central Bank of Bahrain, said: “Keeping up with the increased level of standards issued by international regulators is an ongoing challenge. We need to have the right balance between the international and local standards in order to maintain a healthy market as well as an efficient banking sector. The absence of accurate data and the lack of Shariah compliant liquid assets continue to be among the key challenges that we have to deal with.”
“In order to apply strong compliance on corporate operations, we need to see a real shift in the corporate culture and mindset,” she added.
Altaf Dossa, Advisor, Banking Control, Saudi Arabian Monetary Agency, said: “Through our presence on the Basil committees, we have been able to do a major transformation to the way we implement and enforce local regulations. We are also focused on driving corporate excellence, maintaining consumer protection, and applying technologies to enhance our regulatory efficiency.”
He noted that building a local human capital is now a must and the Saudi government is currently looking at hiring the appropriate training agencies in order to develop a solid local expertise.