Abu Dhabi Global Market laying strong foundation

Abu Dhabi Global Market is laying strong foundations to become one of the top ten global financial centres in years to come.

The Abu Dhabi Global Market – the financial free zone being set up in the capital – is a project “born out of ambition, rather than necessity”, in the words of its chairman Ahmed Al Sayegh.

So, as you would expect from a flagship project in the capital, progress towards an actual launch of the Global Market has been cautious, evolutionary and carefully planned. There has been no big razzamatazz, but quietly behind the scenes Mr Al Sayegh and his project staff have been laying the foundations for what, if all goes to plan, will become one of the top ten global financial centres in a few years’ time.

There is a little bit more in the public domain now. Recently, the Global Market’s website went live. Although this is still a work in progress, it gives it a little more tangible substance.

Then, just a couple of days ago, the Global Market signed an agreement with the Central Bank of the UAE on cooperation and sharing of information. Although on first sight this looks like a courtesy, in fact it is the first in a series of agreements the Global Market will sign over coming months with a swath of international financial bodies that will eventually establish it as an independent, self-regulating entity, a financial hub in the UAE to complement the Dubai International Financial Centre.

When the King of Spain, Juan Carlos I, visited the Global Market’s home on Al Maryah Island recently, he was given a presentation of the current status and plans. Financial professionals who accompanied the king were impressed by what they heard. A clear strategy is emerging for the Global Market, and it will not be long before some more positive signs of this are made clear.

When the plan was announced by presidential decree last year, the authorities reserved the right to establish the full spectrum of financial services on Al Maryah, from investment banking to broking, and commodities trading to asset management.

This vision has been refined to some degree, at least in the first instance. It now seems as though the market will focus on some specific areas as the priorities for the first phase of its existence.

One of these will be private banking. The project planners see a clear competitive advantage to be won in this sector, playing to the traditional appeal of the private banks – discretion, privacy, security. The thinking is that Switzerland and other European centres have lost appeal in recent years, as the regulatory and tax authorities in the West have increased scrutiny of their activities.

The clear winner has been Singapore, which has taken over much of the business that would have ended up in Geneva or Luxembourg. Abu Dhabi recognises the potential here to make itself another global private banking centre, along with related activities such as wealth and asset management for wealthy but privacy-conscious people round the world.

The ambition is to enable private banks in the Global Market to book business and assets in the UAE, rather than at their European headquarters.

Financial capital is one of Abu Dhabi’s strengths; another is commodities trading, where it has regional power as one of the great oil-exporting centres of the Arabian Gulf. Commodities also look certain to feature as a major plank of the Global Market’s offering.

Of course, all this has to be well governed and regulated to give it international credibility, and the project team is in the process of appointing a strong corps of executives to head the three key functions: regulator, registrar and courts.

The first is vital, especially in the modern era of heightened awareness in the global financial community of the need to combat money-laundering, sanctions evading and terrorism funding. A first class independent regulatory board will be required to back up the chief executive.

The registrar’s job is to implement the membership regime of the Global Market, and administer the registration process, and this too needs a top-notch appointment.

The head of the legal system will be an experienced judge with international experience overseeing a common law system such as governs virtually all other financial centres.

When these three key appointments are made, the Global Market will have to look in detail at all the other factors that go to make a financial hub: data and vault facilities, hospitality and conference venues, and infrastructure and transport links.

It all is coming together nicely. Watch this space.

Follow us on Twitter @Ind_Insights