Centre of attention

Thorpe: our approach at the QFCRA has been to fill in the gaps in the framework as demand arises in new areas.

Phillip Thorpe, chairman and CEO of the Qatar Financial Centre Regulatory Authority (QFCRA), outlines his approach to drawing up an framework for Qatar’s financial sector.

How do you draw up a regulatory framework in the beginning?

The way we structured the framework was to fill in the bits we knew we needed at the outset, so we put a lot of our effort into rules and regulations for banking, insurance and suchlike in place, and then we flagged other elements of the regime that we would develop as the demand arose.

We've seen two or three areas where as demand has arisen we have developed new rulebooks. One area has been collective investment funds. We've seen a lot of interest and accordingly we've been developing a regime and rulebook for that. We've recently released a paper on retail provisions, particularly with an insurance focus, because we've been getting strong demand from institutions in that area.

As with those, so with the derivatives market, we didn't put in place much more than the skeleton at the outset and now are filling in the details. We didn't, for example, have a specific market abuse regime. Now with the development of an exchange we are putting that in place.

What kinds of regulations have you had to put in place to prepare for IMEX?

A lot of the work we're doing at the moment is to create a complete framework, so the old regulatory piece of advice, ‘follow the money', is no less valid when looking at a huge exchange system than anything else. For us, the clearing and settlement systems are critical components of the proposition.

Accordingly, quite a bit of the work we're doing relates to the requirements that will apply to the clearing system, settlement arrangements, the ownership/membership arrangement of clearing and that's all part of our regulatory framework for that exchange.

Do you talk to other regulators in the GCC and Middle East?

We were very cognisant of the fact that in the region there are a wide range of initiatives going on and we felt that it would be a good idea for there to be high levels of interaction between the regulators in the region.

As a result of that we were very pleased to be part of the GCC regulators summit in February here in Doha. I think it's the first time that regulators from the new jurisdictions have got together and exchanged ideas.

We're here designing regulatory systems, but I'm not telling you any secrets when I say that we're very willing and able to borrow the experience of others.

How are you trying to make Qatar an attractive centre for investment?

What we're very concerned to do is ensure that we benchmark international standards. Do we look to see whether we can make our jurisdiction more attractive than the one next door? The reality is of course we always want to produce a jurisdiction that's attractive, but that's a subset of ensuring high standards. First and foremost for us is creating an environment that generates confidence and you only get that if you evidence high standards - that's the primary design for us.

What is next big issue that the QFCRA will need to address?

The government has indicated an enthusiasm for creating an integrated regulator in Qatar which probably is the least insignificant matter in the region in terms of financial services reforms.

We're now putting our thinking caps on in respect of that proposition. We've been delighted to see ministers identifying the value that a high standards environment is creating in Qatar and the commitment to making that the default position for all of Qatar seems entirely sensible to us.

Could we see a unified regulator for Qatar's financial sector?

We're some distance off having the details and would be premature to say what it will or will not include, but the approach of ministers is one of recognising that in a small country, having two parallel financial services environments is probably a slightly over-generous case of supply and it makes sense to try to steer everything towards a single system, a single system of the high standards that we are putting in place.

Our greatest asset here in Qatar in a way is that the market here is a small one and we're only looking at relatively small numbers of institutions, so it's a very good time to be contemplating what otherwise would be quite a major piece of engineering.

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