The Business Year

Philippe Ghanem

UAE, ABU DHABI - Finance

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Vice-Chairman & CEO, ADS Securities

Bio

Philippe Ghanem is CEO and Vice-Chairman of ADS Securities, an Abu Dhabi-based financial services company conceived to offer world-class global trading and investment solutions from the Middle East. He was instrumental in setting up ADS Securities, drawing on his experience in both establishing and running entrepreneurial financial businesses. He is also Deputy CEO and Vice-Chairman of ADS Securities’ parent company, ADS Holding, and Chairman of ADS Securities London Limited. Prior to joining ADS Securities, he successfully created and launched a number of online forex trading firms. He holds a bachelor’s of business administration from the International University of Geneva.

“As the Middle East’s largest foreign exchange brokerage, it was essential that we had an operation in the UK.“

It is a great time for capital markets in Abu Dhabi. What is your vision for the development of the sector?

2016 produced a year of unexpected political and economic shocks, which for many countries has led to uncertainty and worry. The UK’s decision to leave Europe, Donald Trump winning the US election, the continued low oil price, and dramatic changes to the value of key currencies has impacted financial markets. But the strong leadership and ambition of President H.H. Sheikh Khalifa bin Zayed Al Nahyan, and the Crown Prince, H.H. Sheikh Mohammed bin Zayed, means Abu Dhabi is well placed to benefit from all these ‘shocks.’ The diversification of the economy through the creation of a well-capitalized, credible world-class financial sector, has provided a vehicle for success and growth. At ADS Securities we are very grateful for the opportunity this has provided us and I believe that the best is yet to come. The global financial services industry has evolved significantly since ADS Securities was launched in 2010. Technology, regulation, and capitalization continue to shape the market in the near and medium term. Last year the Sterling flash crash also demonstrated the risks that technology, in inexperienced hands, can play in our industry. To me it showed that global markets may not yet be ready for highly sophisticated trading technology. If systems are not well-managed by professionals, who understand the industry, it can cause significant damage. In response to the introduction of new technology and products we are seeing a very necessary increase in the regulation. But in some markets this has become politically motivated which has made it restrictive and difficult for businesses to manage. Tighter regulation—including demands for higher capital requirements—has driven many well-known, established companies, out of business. The firms that have invested in managing regulation and expanded their compliance teams have stayed the course. Here in the region Abu Dhabi is a relatively new financial market which does not have legacy issues and accordingly we have been able to use regulation to support best practice and growth. ADS Securities has an advantage because regulatory measures and compliance are second nature to us. One of the major changes, driven by regulators, has been the requirement for higher capital adequacy levels. This has meant that many firms have had to become more risk averse, more conservative, and less accommodating to their clients. To access high quality liquidity financial institutions dealing with a range of asset classes, including foreign exchange, equities, and securities, you need to have the right capitalization measures in place. Our shareholders recently increased their capital investment in ADS Securities, deploying an additional USD185 million to increase our total capitalisation to USD585 million. This is a strong signal of their belief in both the enormous potential of our business and a clear opportunity for further differentiation in the industry.

The downswing in oil prices prompted financial services to increase their market share. How has this effect worked in favor of financial companies such as ADS Securities?

The visionary leadership of Abu Dhabi and the UAE prepared the country for the downturn in oil prices. Long before the drop in the oil prices occurred, they foresaw the need for economic diversification to guarantee the country’s long-term interests. Before the downturn in oil prices thriving financial services and real estate sectors had already been established. The importance of this is also linked to the changes in the relative strength of the major currencies. The increase in the value of the dollar against, in particular Sterling, has created many business opportunities for Middle East investors and ADS Securities is ideally placed to facilitate these deals. In addition, companies across the GCC are looking for new business structures and financing options, which represents a great opportunity for players in the sector.

Economic diversification has pushed an increasing number of companies to look for financial assistance. How has this positioned ADS as the partner of choice for financial services?

ADS is one of the largest brokerage companies in the world and the consolidation of the UAE as a global financial hub has worked to our benefit. We have the largest capitalization among brokerage companies globally with USD585 million. This has allowed us to invest in people, technology, and the products we provide to our clients. We have the most advanced trading platforms, which is vital when markets are going through major moves and corrections. If you do not have the systems in place to price into volatile markets, your clients cannot trade. ADS has been able to cultivate a sense of confidence among our clients, so that they know their money is safe, their trades will be executed, and they are backed by advanced technology and state-of-the-art financial regulation.

How has the ADS Arabic mobile trading app increased opportunities in the Middle East?

The launch of OREX Mobile, the first-ever multi-asset smartphone trading application with full Arabic language functionality, represents a major investment for ADS Securities, and was designed to enhance the trading experience for professionals and private investors. The launch of OREX Mobile is the natural next step in the evolution of our brokerage business. It is a new way to access our high standard of service combined with market-leading prices and spreads—OREX puts the power of a desktop in traders’ pockets to make the markets work for them anytime, anywhere. This is the first mobile trading application designed in the region, for the region, using state-of-the-art technology. It offers international pricing, products, and services, all tailored to the unique requirements of Middle East traders. OREX Mobile is a first in MENA and a major step forward in ensuring that Arabic language traders have access to the same tier 1 mobile trading technology available around the world.

You have built a strong presence in the UK financial market. What are the main services you offer from London and how will the recent political events transform your operations in the country?

London represents nearly 60% of the foreign exchange market, so as the Middle East’s largest foreign exchange brokerage, it was essential that we had an operation in the UK. The commercial and business benefits have already validated this decision. In London, our operation is focused on serving our retail and institutional brokerage businesses, as well as services to the broader UK and European markets. Despite the UK referendum results earlier this year, my view is that London’s status as a financial hub will remain untouched. In fact, if the UK looks to follow the Singapore ‘free trade’ model, moving away from the global trade restrictions the European Union places on its members, London may actually grow in importance. The levels of liquidity managed by and going through the City means that even if the UK adopts the Swiss approach of concentrating on a single market area, it will still be a significant global player. This is ultimately a political decision and we will be eagerly watching how things evolve in the coming months.

The Central Bank implemented a series of rules and laws during 2016. How would you assess these changes based on the evolution of financial markets here?

I have always maintained that uncertainty in global financial centers has meant that emerging and developing markets have a greater role to play. The UAE has always been a business gateway for the GCC and this will continue to evolve as countries in the wider region look to expand their financial interests. Abu Dhabi’s geographic location between East and West coupled with access to liquidity provides investors with access to the markets of the Middle East and provides for the investment of money from the region to overseas markets. The role of the Central Bank and the regulators has been key to creating and maintaining an efficient and high quality financial sector which can service the region as a whole. Attracting and retaining investment into the region will facilitate the creation of a greater range of products and services, ultimately expanding the financial services sector. Looking specifically at this past year, the UAE Central Bank has been cautious yet intelligent in moving forward with regulations. Financial regulation is not a short-term play and the Central Bank has been prudent—they understand where financial markets are heading and have applied smart rules that will benefit the industry as a whole.

What do you envision for the near future of the financial sector in Abu Dhabi and where will ADS fit into that future?

Looking forward, ADS will continue to focus on our four core business lines—brokerage (online and offline), debt capital markets, investment banking, and asset and wealth management. Our brokerage business has always served as the ‘engine’ of our company, and we are continually identifying innovative ways to grow and develop. ADS’ ability to leverage our strong relationships, robust capitalization, and global influence to reach out to bankers, brokers, and limited partnerships to ensure our clients benefit from the deepest liquidity, fastest execution times, and most competitive spreads to truly set us apart. The launch of our Prime of Prime offering earlier this year is filling a market gap in which leading brokerages like us have a role to go between clients and their own prime brokers and provide access and help to manage risk and share their credit lines. We also foresee growth for our debt capital markets business. With the low oil price and global tightening of liquidity, corporates will need to raise capital through debt structures. The secondary markets are very strong and stable—I think the UAE in particular is one of the most stable in the world. We will continue to help structure issuances and sell them. Finally, Abu Dhabi has emerged as the offshore wealth center of choice and we see massive opportunities for our asset and wealth management business—it has already seen immense growth in both our client base and in our Assets Under Management (AUM). We are able to offer our clients bespoke investment expertise, operational excellence that is transparent and discreet, as well as a real understanding of the risks and dynamics of the markets. Our asset and wealth management offering has not been developed for the mass market—we served targeted HNWIs and institutions, offering our clients a range of assets, products and services across international markets, as well as managing their personal wealth. We don’t have the historical limitations of private banks or the product and service restrictions associated with international investment firms. So ultimately, our aim is not to compete with banks in the country or the region, but to add value and support to the market as a whole. The UAE has the connectivity, the resources, the infrastructure, time zone, and regulatory environment to provide any financial services professional with whatever service they need. Both Vision 2021 and Vision 2030 form a solid financial package in the long-run that will establish Abu Dhabi as one of the strongest financial services markets on the planet.

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