Dubai's financial centre expects the number of financial firms setting up there to rise fivefold by 2009 and has ambitions to eventually rival London, New York and Hong Kong, one of its senior executives said.
Sandy Shipton, head of asset management at the Dubai International Financial Centre (DIFC), said he expects 75 financial companies to register to do business there by the end of this year.
He expects that number to rise to 250 by the end of 2009 as companies are attracted to the DIFC by its lack of Islamic regulations, he told Reuters on the sidelines of the ICBI Fund Forum conference in Monaco. "There is New York, London and Hong Kong. DIFC is positioned to be the fourth-biggest financial centre," he said on Thursday.
The zone was created through a series of constitutional and legal measures, including a federal decree from the United Arab Emirates (UAE), and opened in 2004. There are 53 financial companies registered to operate there.
Dubai has had to embrace Western-style legal norms, in contrast to the existing Shariah law codes, to make the 50-hectare jurisdiction appeal to global investors, Shipton said. "No capital markets of any size have materialised (in the region).. they are home-grown, home-regulated, opaque and discredited markets," he said.
Shipton said the DIFC had laid down tough regulatory standards to reassure investors it was a safe and reputable place to do business, drawing in companies dissatisfied with conditions in other financial centres. Shipton said he recognised that Dubai's location in the Middle East meant that problems of violence in the region was a risk that had to be understood.
The DIFC has made a mark overseas by its acquisition of a 3.48 percent stake in the pan-European Euronext exchange. When the stake was disclosed, Euronext London's chief executive said in early May that the company was comfortable if the Dubai organisation wanted to take a controlling stake.
Fund management businesses, including the world's $1.5 trillion hedge fund sector, are among the firms Shipton expects to register for trade in Dubai, which has recently passed laws enabling registration of financial companies and their funds.
Hedge funds, for example, could be attracted to Dubai as a one-stop location for running and administering money, contrasting with the current fragmented situation in which thousands of funds are registered and run in different parts of the world.
"We figured if we could lay down an appropriately light- touch regulation for the (fund management) industry, then we would have something they would require." Registration with a global trading centre is an advantage in reassuring clients of the highest possible standards of service, Shipton said.
In Dubai, a recently passed Collective Investment Funds Law requires - for the first time in any part of the world - fund administration companies to be authorised and regulated, Shipton said. The move has already attracted interest from major financial companies such as Dexia and Mellon Financial Corp, he said.
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