The stage is nearly set for Abu Dhabi Global Market to make its entry on the international business scene.
If all goes to plan, the first financial institutions will be licensed by ADGM and take up official residence on Al Maryah Island in the UAE capital by the end of the year. A build-up of nearly two years will be over, and a new global financial hub will be born.
Richard Teng has been a key player in the carefully orchestrated preparations for the official launch of ADGM. He was appointed to head up the market’s crucial regulatory function earlier this year, but only got his feet properly under the desk in the spring. Since then, he and a growing team of executives under the chairman Ahmed Al Sayegh have been working to get ADGM up and running on time and on schedule.
“Several milestones have been achieved,” says the 44-year-old Singaporean with a career at the highest levels of the island state’s financial industry already under his belt. “The general commercial regulations were finalised in June, and the public consultation on the financial regulations closed in early August.
“Once those have been finalised we will be able to ‘go live’ in the early part of the fourth quarter. By then, the rules and regulations, and all the framework of ADGM, will be active and we will be ready to take applications. All of the building blocks that allow firms to submit an application will be in place. I think we will be very quick to get people in once that process is complete. I’m pretty confident there will be plenty of interest in ADGM.”
He is clear on the role of the new market within Abu Dhabi’s ambitions. “The whole premise of ADGM is to support the strategic plan of Abu Dhabi Vision 2030 and there is a clear need for more financial services. The aim is to grow the non-oil sector, especially in financial services.”
In global terms, the aim is also to build a new regional financial hub, with an initial emphasis on private banking and asset management, to capitalise on the UAE’s geographical advantage at the centre of the fastest-growing markets in the world, and challenge existing financial centres in Europe and Asia.
“The ADGM will have international outreach. We have travelled to London, New York, Singapore, India and China, as well as continental Europe and the Arabian Gulf region too. We’ve talked about requirements in those places. We have talked to the Dubai International Financial Centre, of course, but we have also talked to other UAE financial institutions, like the Central Bank and the Securities and Commodities Authority,” says Mr Teng.
The launch of ADGM comes at a transformational time on the world financial scene. Partly because of regulatory pressure in America and Europe, but equally because of the dynamic growth of the Asian economies, private banking and wealth management business has gravitated eastwards, to the bustling new hubs of Hong Kong and Singapore.
Mr Teng’s appointment and key role in the build-up towards launch were clear signs that Abu Dhabi policymakers recognised the crucial role regulation would play at ADGM, reflecting the UAE capital’s traditional values of financial strength and cautious management.
“We will offer a calibrated regime that has an integrated regulator, but also an independent regulator. It will not be a ‘one size fits all’ model, but will be calibrated according to the size of the member firms and their requirements in the market,” Mr Teng says
“The public consultation process on the financial regulations was very positive. We have made some tweaks in some areas to the draft but they are not major changes. They are tweaks and enhancements, not a change of direction,” he adds.
The regulations were drawn up in consultation with an “expert panel” of banks and financial institutions, including some of the best known names in regional and international banking, such as National Bank of Abu Dhabi, Goldman Sachs and HSBC.
Mr Teng underlines the “global” aspect of ADGM. “Another way in which we will give people more certainty and reassurance is via international relations with other financier centres. Close international cooperation is very important for us. Sharing a common purpose and establishing global relationships will be crucial. We already have some skeletal MoUs under consideration with international regulators.
“We have met with American financial institutions and with American regulators. There are a significant number of American participants on the expert panel and they are very engaged. I think they will be voting with their feet,” says Mr Teng.
But at the end of the day ADGM will grow via the strength of its business offering, he believes. “I do not believe in offering regulatory arbitrage around the world. The Swiss model and the Singaporean model are designed to generate wealth for their region, not to cannibalise business from the rest of the world, and the same is true of ADGM,” he says.
International agreements may be crucial on the regulatory front, but the ADGM will be aiming to attract business in an increasingly competitive market place against some well-entrenched rivals, including the Dubai International Financial Centre.
“I do not believe we will have a competitive issue with Dubai. There is more than enough of that kind of business to go around. People suggested that Singapore would take business from Hong Kong but that has not happened. Both have grown the total markets. Singapore has helped link the regional economies of the South East Asian countries. What we are seeing is a trend for wealth to be invested much closer to where it is generated,” says Mr Teng.
He believes there are lessons to be learnt from Singapore. The wealth and asset management business there has grown five-fold in two decades, he says, and the conditions are ripe for similar growth in Abu Dhabi.
“There are a lot of similarities between Singapore and Abu Dhabi. In Singapore there are big sovereign wealth funds like General Investment Company and Temasek, whose job is to help to implement long-term vision and drive economic growth, just like in Abu Dhabi. Maybe the Singapore economy lacks real critical mass in terms of size, which is inevitable given the area of the country, but it is really a hub for services for the rest of the region. It has a lot of the strengths of Abu Dhabi,” he says.
The finishing touches are being put to the structure of ADGM. The market will rest on what Mr Teng calls “three independent pillars” – the registrar, the regulator and the court system. Only a chief justice remains to be appointed to sit atop the legal pillar. ADGM executives hope an appointment can be made soon. It will be the chief justice’s responsibility to set up an arbitration function, regarded as essential in a modern financial hub.
“In Singapore we produced a culture that is not disciplinarian, but is robust and understanding to the needs of the financial community. It has to be sound, consistent, reliable and proportionate. I don’t like the idea of an overly blunt approach to regulation. I am just as concerned to make the regime flexible,” says Mr Teng.
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