He doesn’t look like the kind of guy who would get upset easily. If anything, Ian Johnston comes across as a little shy, gentle and unassuming. But dig a little deeper, and it soon becomes clear that the new chief executive of the Dubai Financial Services Authority is no pushover. “Regulation is about having a row of levers. When you see something going wrong, you have a few levers you can pull. Sometimes the right lever is enforcement — you just have to say, ‘you know what, that’s unacceptable. We are kicking you out’. Making the choice of what lever to pull takes a bit of wisdom.”
There are few better regulators in the market right now than Johnston, who took the reins at DFSA in June this year, having first joined the organisation in 2006, as the managing director to head up the Policy and Legal Services Division. Initially the DFSA appointed a firm of international headhunters to fill the vacancy, but, not surprisingly, decided to settle on one of their own. In Johnston, they have a man with a glittering track record in the complex world of financial regulation, having held numerous high-profile roles in Australia and Hong Kong.
And so far, Johnston likes what he has seen.
“I think people are very comfortable here. We have done two stakeholder surveys in five years. Their consistent position was that the rule of law and the regulation was a strong attraction, the fact we are regulated to international standards, and of course the infrastructure of the DIFC. If you look at the big firms that are here, they have voted with their feet to come here. Our job is to create an environment in which companies can do business and making sure the markets are fair and transparent — and that investors are properly protected,” Johnston says.
Johnston is upbeat about the future, though he knows the past hasn’t always been so rosy. Eight years ago, the two high-profile Brits brought in to oversee the DFSA regulation, Ian Hay Davison and Philip Thorpe, were booted out after clashing with their bosses. Back in March 2010, DIFC governor Omar Bin Sulaiman was arrested on suspicion of “profiting from public funds.”
Four months later, former DFSA chairman Dr Habib Al Mulla gave an explosive interview to Arabian Business, laying into the entire concept of the DIFC.
Al Mulla complained: “It’s more of a shopping centre and more of a real estate project…There was a clear vision with the first blueprint for the DIFC… [However] it has moved away from the path we set out on, which was to build a financial centre with high standards, to attract the 500 top companies in the region, to become a hub for doing business for the whole region. That initial direction, particularly when it comes to the exchange, but also the DIFC as a whole, has been lost.”
Johnston says he isn’t in the business of responding to media comments made by others, and prefers to focus on the positives — of which, no doubt, there are many.
He says: “One of the things in the time I have been here, there were less than 100 firms that were regulated, that has trebled. But it is not just more firms, the business has deepened. Companies are doing more things, they are managing more assets. So it’s not just broadening, its deepening. So for us as a regulator it’s good.”
Johnston adds: “I would expect the DIFC to keep growing. As for regulation it will follow more of a global agenda, the new markets law we are bringing in will bring us closer in line to Europe. In ten years time you will see fewer difference between regulations in different places, so it will be easier to move around.”
While Johnston gets his teeth stuck into new laws, the entire set-up of Dubai’s financial hub is also undergoing transformation. Earlier this year the DIFC announced it was splitting into two. The DIFC Authority, a government body, saw its property portfolio spun off, to be managed by a new entity, the DIFC Properties.
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