Under the regulations listed in the document institutions applying for a licence will have to provide the regulatory agency with detailed information covering their business plan, share ownership structure and operating practices. The authority will also take into account the regulatory ‘track record’ of each prospective institution before issuing a licence.
The draft sets out the boundaries governing the DIFC’s relationship with the Central Bank of the UAE. The regulatory agency plans to enforce its own legal framework on the market separate to existing federal legislation governing the financial sector in the UAE, which is deemed insufficient for an international financial centre. The document states: ‘It is expected that DIFC licencees will not be subject to the laws of the UAE or Dubai where the DIFC has made its own laws.’
Drafts of these laws governing the market’s regulatory boundaries are expected in the fourth quarter. DIFC says this will be followed by a federal decree and a memorandum of understanding between the central bank and the DIFC’s regulatory agency defining clearly the issue of jurisdiction over institutions operating in the market. International law firm Clifford Chanceis acting as the legal adviser.
DIFC plans to begin processing applications from banks and individual investors in late September and expects to issue its first licences in the first quarter of 2003. ‘If they want to establish a world-class financial centre then local laws governing the banking sector are not applicable,’ says an international banker based in Dubai.
DIFC is also awaiting bids from a group of international banks bidding for a financial advisory mandate (MEED 16:8:02). The banks expected to table proposals by the 29 August deadline are Barclays Capital, Credit Suisse First Boston, Deutsche Bank, Standard Chartered Bank, HSBC Investment Bank and Citibank.
The proposals are understood to be based on a requirement for between $500 million-700 million to finance the establishment of the financial district, which is to be built on a site south of Sheikh Zayed Road. ‘We are looking for immediate finance to cover a two-year start up period and a medium-term facility covering a five-year funding period for the further development of the project,’ says a spokesperson for DIFC.
Consultants are due to submit proposals for the drafting of a masterplan for the financial district in September. The US’ Turner Internationalis the project manager (see Construction).