New Kid on the Financial Block; London, New York, Hong Kong and Dubai? Could Dubai's International Financial Centre (DIFC) and Subsidiary Dubai International Financial Exchange (DIFX) Be about to Achieve the Same Stature as the World's Premier Financial Markets? John Joyce, Global Executive Chairman of Wenham Major, Provides His Perspective on the DIFC and Its Importance to Economic Growth in the Middle East
The Dubai International Financial Centre was conceived by the Government of Dubai for the benefit of the UAE and the wider region as a whole. Its remit is to create a regional capital market, offering investors and issuers of capital world-class regulations and standards.
Launched in 2004, DIFC focuses on several sectors of financial activity: banking services, capital markets, asset management and fund registration; insurance and reinsurance; Islamic finance; and business processing and ancillary services.
It is host to many of the world's leading global financial institutions including Bloomberg, Standard Chartered Bank, Merrill Lynch, Barclays, Deutsche Bank, Goldman Sachs and ABN Amro, to name a only a handful - the list of those registered reads like a who's who? of the international financial world.
The fact that a significant and growing proportion of the Fortune Global 500 companies have located in DIFC is further proof of its success.
A world-class stock exchange, the Dubai International Financial Exchange (DIFX), opened in the DIFC in September 2005.
DIFX aims to become a leading forum for the listing and trading of a range of securities including equities, bonds, funds, Islamic products and derivatives.
UAE companies are able to list shares on the DIFX by setting up a holding company in the DIFC. Companies seeking listings on the exchange must have an expected minimum market capitalisation of pounds 100 million.
The DIFX generally requires a minimum free float of 25 per cent of the securities to be listed.
The exchange is additionally regulated in such a way as to allow companies which list on it to determine the portion of shares that they want to offer to the investing public.
This flexibility is designed to encourage family-owned businesses and government entities discouraged by lower listing limits elsewhere in the UAE.
DIFC/DIFX now owns a stake in both the London Stock Exchange and NASDAQ, a clear sign of its intention to diversify into financial services from oil. The rise of sovereign wealth funds - funds from Gulf states which seek to diversify their economies by investing surplus oil revenues into global asset classes to create a fund guaranteeing national income once hydrocarbon revenues tail off - further add to the region's weight as a global financial services powerhouse.
Our own experiences of DIFC and DIFX have been first rate, and I certainly believe that the DIFC is a serious contender in the global financial exchanges. …