With many Gulf countries setting up financial harbours these days, establishing a unique and attractive profile is a crucial task for each. Last week saw discussion of how the Qatar Financial Centre (QFC) has been going about this, with the centre revealing that it is now operating with a remarkable degree of autonomy.
Stuart Pearce, CEO and director general of the QFC Commercial Authority, and Philip Thorpe, chairman and chief executive of the QFC Regulatory Authority (QFCRA), shared the floor at the Qatar Economic Forum’s third session, dedicated to the QFC.
Competing with Bahrain’s Financial Harbour and Dubai’s International Financial Centre (DIFC), the Economic Forum was a great opportunity to stress the QFC’s profile.
While some at the forum were uncertain exactly how different the QFC will turn out to be, it was hard to find anyone who did not recognise the benefits of having international institutions of the type attracted by the centre based in the country. As a consequence, it was the QFCRA that came under the greatest scrutiny – with Thorpe fielding the questions raised.
The QFC already has its own laws regarding securities, companies and insolvency. Drafts of legislation framed by the QFC are circulated within the industry and a period of 30 days is usually given for feedback. Drafts of regulations concerning mutual funds are currently still being prepared.
As well as making clear it will deal with any labour- or visa-related disputes that arise within the QFC, the QFCRA has promised that institutions can expect to receive licences in three months.
The QFCRA is insistent that its slim-lined bureaucratic style will allow institutions to set up shop with a minimum of fuss while at the same time keeping them tightly in line with international standards.
Since 1 May 2005, when the QFC started receiving applications, the centre has already granted six licences and confirmed interest from a number of large institutions, including HSBC, Goldman Sachs, Morgan Stanley and Lehman Brothers.
Within the bounds of the QFC, the regulatory authority will have full powers to regulate, supervise and discipline without any outside interference. The QFCRA’s disciplinary powers will see it able to fine an offender, limit its operations and even revoke an institution’s licence.
Should a business disagree with the QFCRA’s decision, it will have the right to approach an independent appeals body under the QFC umbrella.
The QFC scored a major coup when it hired regulatory hard-hitter Philip Thorpe. Formerly the regulator at the DIFC, he was instrumental in the establishment of the UK’s own Financial Standards Authority and brings with him a certain amount of credibility to the role of regulator.
However, it may take more than Thorpe’s reputation to make the QFCRA a convincing regulatory body.
There is still a question mark over what happens when a dispute arises between an institution regulated by the QFCRA and one outside the QFC regulated by the central bank.
Talking to OBG, Michael Webb, managing director for financial sector development and policy at the QFCRA, addressed this issue by saying, “It will depend, of course. A dispute will ordinarily be about a contract. The contract can provide for which law it is governed by. The parties to the contract can then choose which court is to consider the case – the QFC’s commercial court, the tribunal, or a local or other commercial court. There is also the possibility of arbitration.”
While now almost a year old, the QFC is still a new initiative for Qatar. Its establishment may be essential to Qatar’s continued growth, but only time will tell if the QFCRA is up to the job of policing it.