Asset managers urge unified rules for Middle East

Friday, Oct 07, 2011

Gulf News

Dubai Asset managers in the region yesterday called on governments in the Middle East to unify their regulations governing the financial services industry.

At the fifth Annual Mena Investment Management Forum in Doha, top executives said the fragmented regulatory framework is hindering the growth of the asset management industry in the Gulf Cooperation Council countries which has a fairly small amount of assets under management, currently estimated at around $50 billion (Dh183.5 billion).

They said each GCC country — the UAE, Qatar, Oman, Bahrain, Kuwait and Saudi Arabia — has its own set of rules, which at times don’t conform to each other and make it difficult for them to sell products.

“Each of them frames their own laws in terms of how to regulate the market. What may be applicable in the UAE may not be applicable in Bahrain or Saudi,” Krishnan Ramachandran, CEO of Barjeel Geojit Securities, told Gulf News.

“To do business in the UAE, you have to follow one set of guidelines. If you want to do business in Saudi, it’s a completely different set of rules. There should be some sort of a unified code to avoid confusion.”

New products

With rules variying from one nation to another, firms tend to face obstacles when they try to introduce new products. “The time to market is delayed. For instance, in Dubai, they can bring out the product in two months’ time. It might take probably six months to do so in Saudi. Or it may never happen in another market because you have to go through a process which you can’t avoid,” Ramachandran added.

“If you want to sell, things become difficult. Selling in this market has its own constraints.” Ramachandran was one of the panellists in the forum that tackled the issues affecting the industry.

However, other industry sources said Middle East countries could be hesitant to come up with a common regulatory framework as they tend to be protective of their own individual investors.

Coordinated approach

“But if you look around the GCC, the asset management businesses would like to see a coordinated approach to regulation that we all understand and can sign up to,” said another panellist, Peter Duke, head Dubai representative office, Fil Investments International.

A recent survey by the Middle East Investment Panorama revealed that a substantial 75 per cent of investment advisers in the region agreed that the regulatory structure was the key hurdle in the financial services industry.

The study also confirmed that the Middle East remains a growth opportunity for financial services companies, citing that the gross sales of investment funds in the GCC and Mena countries are actually several times bigger than figures published by other sources.

This is due to indirect business written by international life companies and private banks via offshore centres.

By Cleofe Maceda?Senior Reporter