The Dubai International Financial Centre (DIFC) has predicted that it could become one of the world’s leading funds centres following the enactment of The Collective Investment Law 2006.
Dr Omar Bin Sulaiman, Director General of the DIFC, added: “The funds sector is central to the financial services industry and to the global economy. The DIFC and its regulator, the DFSA, have worked extremely hard to create the right environment for the industry to come to the DIFC, and we believe that now we have achieved this, the flood gates will open and that fund managers and administrators will see the unique benefits of the DIFC and the region.”
“Collective investments, in the broadest sense, covers all funds including mutual funds, property funds, Islamic funds, hedge funds, fund of funds and private equity funds,” explained Sandy Shipton, Head of Asset Management at DIFC. “The enactment of this law is the final piece in the jigsaw that creates a world class domicile for the funds industry here in the DIFC.”
The legislation to regulate the managed funds industry within the DIFC has been enacted by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai.
“The new Law completes the Regulatory Law governing the Asset Management industry within DIFC and will, over time, lead to the DIFC becoming a leading internationally recognised Funds Centre,” added Shipton.
The size of the funds industry globally amounts to many trillions of dollars, with pension funds making up perhaps a third of this sum. The USA and Europe account for over 85% of this market. The Middle East region has never had a funds industry, but the new DIFC law puts in place the regulatory and legal environment that will enable the funds industry to establish and grow in this region.
Sandy Shipton also highlighted the regulatory advantage enjoyed by DIFC as another driver of the industry: ”DIFC’s funds offering differs from other centres, in particular those “offshore” locations which lack the credibility of being onshore, transparent, and regulated to international standards, as the DIFC is.”
About the DIFC: The Dubai International Financial Centre (DIFC) is an onshore hub for global finance. It bridges the time gap between the financial centres of Hong Kong and London and services a region with the largest untapped emerging market for financial services.
In just over one year, more than a hundred top international institutions have joined the DIFC as members. They operate in an open environment complemented with world-class regulations and standards. The DIFC offers its member institutions incentives such as 100 per cent foreign ownership, zero tax on income and profits and no restrictions on foreign exchange. In addition their business benefits from modern infrastructure, operational support and business continuity facilities of uncompromisingly high standards.
The DIFC is made up of the following core bodies:
1. The DIFC Authority (DIFCA) - Responsible for the Companies and Security Registries and attracting financial as well as non-financial institutions to set up in the DIFC. (www.difc.ae)
2. The Dubai Financial Services Authority (DFSA) - An independent, unitary regulatory authority, responsible for the regulation of all DIFC operations. Its principle-based primary legislation is modelled on that used in London and New York, and its regulatory regime operates to standards that meet or exceed those in major financial centres. (www.dfsa.ae)
3. The Dubai International Financial Exchange (DIFX) – A liquid and transparent electronic market trading securities, bonds and derivatives, launched in September 2005, the DIFX eases access to regional and international investment opportunities and funds. (www.difx.ae )
4. The DIFC Courts - An independent court system set up to uphold the provisions of DIFC laws and regulations, the courts provide comprehensive legal redress in civil and commercial matters within the DIFC. The DIFC Courts system is especially designed to deal with all of sophisticated transactions that will be conducted within DIFC. The DIFC Court laws, based on the common law,
not only sets out the jurisdiction of the court but also provides for a dispute resolution services, including arbitration and mediation, thus allowing for the independent administration of justice in the DIFC. ( www.difccourts.ae )
