Just one person has been imprisoned for breaking Qatar’s financial market rules in recent years. Common sense suggests he was unlikely to be the only one and that others have simply escaped punishment.
Qatar’s new single regulator for its financial services industry, which should be set up by the autumn, will make it a priority to take action against others who are currently getting away with market abuse, according to one of the people tipped to run the regulator.
Phillip Thorpe, who runs the Qatar Financial Centre Regulatory Authority (QFCRA) – one of the three existing regulators – says that people who give their friends financial information about companies before the information is disclosed to the whole market will increasingly find themselves being investigated by the new regulator.
The single regulator is the clearest example of a trend to reduce the number of regulators around the region. Egypt is expected to reveal its plans for a single regulator covering all financial activity other than banking later this year. The Central Bank of Bahrain is also overhauling its rulebook to cover every type of financial services.
Governments have accepted the theory that a single regulator can anticipate problems more quickly than multiple watchdogs, because it sees the activity of the whole market rather than the workings of one or two parts.
But there are other problems. Qatar’s existing regulators have a problem finding enough people skilled in detecting market abuse. Their problem is likely to be shared in other Middle Eastern markets. Qatar’s legal system has also proven itself ineffective at prosecuting complex financial crimes. The authorities hope that a specialist system of commercial courts will solve that.
Ultimately, the new regulator’s progress will be best measured by the number of people that it catches.