'I have had lengthy meetings with the Central Bank [of the UAE] governor and I need to draft an MoU [memorandum of understanding] between ourselves and the bank,' says Hay Davison. 'That is going to happen as soon as we get the federal decree from the UAE that authorises us to legislate for the things we need to cover. We need to pass our own legislation. This will differ from what is already in place.'

The contents of the federal decree will have an important impact on the development of the DIFC. 'I hope the federal decree will say the DIFC will have the power to legislate in respect of securities activities in the market and in all other fields that are relevant to the market,' says Hay Davison. 'If they don't legislate then the laws of the UAE will apply. So, we may have an insolvency law, we may well have an arbitration law. There will be a tighter company law within the DIFC. But I don't have the decree yet.'

The presence of Hay Davison, and a number of other high profile international figures such as Robert Alan (who previously served as the chief commissioner in Hong Kong) and Michael Blair (who was with the UK's Financial Services Authority), is essential to the credibility of the DIFC (MEED 1:3:02).

'The political and economic logic [of the DIFC] appeals to me. there is a real argument for a regional capital market that will provide funding within the region,' says Hay Davison. 'Our markets will be wholesale banking, stock market, fund management, reinsurance, e-banking and back-office.'

However, the need for a strong regulatory framework based on international best practice is inescapable (MEED 22:2:02, Cover Story). 'I have a very simple sanction. These arrangements have got to get past the chief compliance officer at Goldman Sachsbefore they will take out a licence. If they don't take out a licence, the existing standards are not good enough,' he says. 'If you want this to succeed you have to bite the bullet, and there is no reason why they can't.'