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Middle EastApril 3 2005

New beginnings

The Qatar Financial Centre Regulatory Authority’s new chairman tells Stephen Timewell how the centre is establishing a one-country, two-system environment.
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Philip Thorpe, the recently appointed chairman and CEO of the Qatar Financial Centre Regulatory Authority (QFCRA), is a rare commodity – a high quality and internationally recognised financial regulator. But it is not only the New Zealander’s earlier experience as managing director of the UK’s Financial Services Authority and president of the Washington-based Institute for Financial Markets that marks him out. His 2002-2004 stint as CEO of the Dubai Financial Services Authority (DFSA) ended in abrupt dismissal.

The unceremonious and undeserved sacking of Dubai’s two top regulators last August badly damaged the DFSA’s credibility but left Mr Thorpe unaffected. Unsurprisingly, the Qatar authorities were keen to snap up a regulator who knows Gulf finances and politics.

Mr Thorpe is well equipped to pursue in Doha what he had been doing in Dubai but, speaking to The Banker shortly after taking up the post in March, he is well aware of the challenges ahead. “The critical issue is delivering an operating regulatory function in the ambitious timetable set out,” he says. The target date is May 1 for institutions to present applications to enter the Qatar Financial Centre (QFC) and for that to happen, the core regulations for the centre need to be available.

Wealth is the key

Mr Thorpe was confident that the regulations would be released early this month. He emphasises that the key to the Qatar offering is the country’s huge wealth and the $70bn in project finance deals in the pipeline. The QFC is seen as a different model to Dubai’s and Bahrain’s, built around the quality of the institutions and the business generated rather than quantity. “We are focused on finding the right institutions, the right people and the right business,” Mr Thorpe says.

He would not be drawn on the number of institutions the QFC might have by the end of the year but was more forthcoming on the centre’s recruitment, which is in full swing. He expects to have a regulatory staff of 12 in place by the middle of the year. As regards key executive appointments at the Qatar Financial Centre Authority, the QFC’s management, he says decisions had not yet been finalised but were imminent.

How does he view neighbouring financial centres? “Competition is not a bad thing. Everyone is recognising that if they want to make the most of their economies they need to reform. This is a strong reinforcing trend throughout the region; reform of the capital markets is important for the region. Most of the business is being done somewhere else with transactions booked elsewhere. It is far better for growth in the capital markets to happen in the region’s own backyard,” says Mr Thorpe. He says he believes that the market in the region is huge and that raising standards will benefit all.

A new system

What makes the QFC model different? Mr Thorpe says that it is difficult to change existing systems but it is possible to create a new environment for new business. In Qatar’s case, the business contemplated by the QFC has not been done in the country before so it is possible to establish a new environment, which means one country, two systems. With the enormous infrastructure opportunities available and domestic wealth management potential, the QFC has a different focus. It is also keen to attract non-financial institutions such as key players in the construction and project related areas.

The key task of anchoring the regulatory credibility of the centre largely lies ahead but Mr Thorpe is very positive. “I firmly believe in the importance of strong, reliable, internationally recognised centres for financial services as a critical adjunct for growth and development in the region. I am sure that [the Qatar Council of Ministers’] clear commitment to high standards of transparency and integrity will create confidence in the QFC model.”

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