Putting Down Stakes

What were your key objectives when setting up the ADGM in the UAE?

The ADGM was established to support Abu Dhabi’s ambition to be an international financial center. Through foresight and prudent management, Abu Dhabi has created one of the largest sovereign wealth funds in the world and is internationally recognized as a wealth center. It is a natural progression to harness its strengths as a wealth center, with world-class infrastructure, political stability, and security, as well as a high quality of life, education, and healthcare to develop itself as an international financial center focusing on private banking, asset management, and wealth management. The objectives were mainly to develop a conducive ecosystem to support local institutions to grow to become regional and international champions and to attract international players to center their activities here to serve the fast-growing region. We engage our stakeholders closely to understand their needs to fulfill these two objectives and have created a full spectrum of investment and legal structures that support the needs of asset management companies, private banks, insurance companies, and family offices. In response to the high cost of capital post financial crisis, we worked closely with the International Swaps and Derivatives Association (ISDA) and other stakeholders to develop an effective and efficient capital netting jurisdiction. To cater to the demand for a clear and genuine common law jurisdiction, we adopted common law in its entirety and that gives the industry legal certainty with a full body of up-to-date case law.

How do you tailor international standards to the Abu Dhabi financial sector?

We draw from the best practices of successful financial centers around the world and assure alignment with international standards. This allows institutions to operate in an environment that they are familiar with, minimizing compliance costs for global firms that conduct global compliance practice, and assuring a high level of confidence amongst stakeholders. We also work closely with our stakeholders to cater to local needs. The ADGM regulatory model stands on its own in the region. We are an integrated regulator across the banking, insurance, and capital market sectors. This allows us to have a more holistic view of risks. Given the increasing blurring between the different types of products, the ADGM framework allows us to better support our stakeholders in terms of their offerings. Second, the ADGM is responsible for providing a sound, progressive, and vibrant financial services center. The attractiveness of a financial center does not rest only with its legal and regulatory framework, but the broader ecosystem including ease of establishment, time to market, availability of talent, tax treaties, and so on. Together with stakeholders, we are developing an ecosystem that is conducive for financial intermediation and innovation to take place. We have a calibrated authorization framework that caters to both large institutions and boutique firms, based on the business risk and complexity that these players bring. It is not a one-size-fits-all criteria.

How do you see the financial framework evolving as the sector develops and financial technology advances?

It is a continuous process because international rules and regulations evolve as well. At the same time you have to ensure that you push ahead with your agenda to help local and international institutions. An advantage of the ADGM in this regard is that our board is able to enact new rules and regulations swiftly to respond to the needs of the marketplace. Among the key initiative of the ADGM is to support Abu Dhabi to become the financial technology innovation hub to support the GCC region. We have been in talks with potential partners in the US, Europe, China, and this region about developing the ecosystem to support the fintech industry. We recently issued a consultation paper that proposes that establishment of a regulatory laboratory, a first in the region, and which will provide a controlled environment for fintech players to develop, test, and launch their products and offerings subject to regulatory safeguards.