Dubai: The Dubai Financial Services Authority (DFSA) is the independent regulator of financial and ancillary services conducted in or from the Dubai International Financial Centre (DIFC).

The DFSA's regulatory mandate covers asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, an international equities exchange and an international commodities derivatives exchange.

In November 2009, the DFSA celebrates the fifth anniversary of its formation as an independent statutory authority.

In that time, the DFSA has established a recognised and credible track record of regulation and has sought to build international confidence in the DFSA and in the regulatory standards that it administers.

Yet the success of the Dubai International Financial Centre in attracting top quality financial firms to the Centre has, in part, depended upon the visible presence of efficient, modern and independent regulation.

One of the core focus of the DFSA is to protect market participants, provide a level playing field and maintain confidence and integrity in the market.

Having a regulatory framework aligned to international best practice has enabled the DFSA to evolve into a well-functioning and responsive regulator.

Today, the DFSA is supervising more than 320 entities in the DIFC. Effective supervision and control of risk is handled by a team of internationally respected regulators with, on average, 15 years regulatory and compliance experience. Many initiatives have begun and improvements made to ensure that the DFSA's risk-based regulation can respond in a way best suited to changing circumstances.

An example of this was the establishment of a Special Surveillance Unit in 2009 — to capture, understand and respond better to regulatory risks.

The DFSA has given particular emphasis to contributing to regional dialogue and co-operation with other regulators and industry players, through active participation in forums, seminars and conferences.

This has helped position the DFSA as an industry and thought leader and its Executives as opinion formers and changers.

Regional cooperation

Formalising regional co-operation and exchanging regulatory information with DFSA's counterparts in the Middle East has been given, and will continue to be given, high priority. This has been traditionally brought about by way of formal bilateral regulatory protocols in the form of Memoranda of Understanding (MoU).

In February 2009, the DFSA signed an MoU with the Central Bank of the UAE. This MoU with the Central Bank followed a similar arrangement with the Federal securities regulator, the Emirates Securities and Commodities Authority (SCA) and, as the DFSA's 10th regional MoU, confirmed the priority it has given to co-operating with its peers in the GCC.

In 2006, the DFSA became the first financial services regulator in the GCC to become a signatory to the International Organisation of Securities Commissions (IOSCO) multi-lateral Memorandum of Understanding (MMoU). This MMoU set the highest international standards for information sharing and assistance among securities regulators.

It was followed in 2008, with the DFSA becoming a signatory to the BOCA Declaration, the agreement on co-operation and supervision of International Futures Markets and Clearing Organisations.

Further afield, in 2007, the DFSA entered into a historic MoU with the four Federal agencies principally responsible for banking supervision in the United States — the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision.

Today, the DFSA has expanded its international network of regulatory co-operation by signing 46 bi-lateral Memoranda of Understanding with regulators of strategic importance to the DIFC including the UAE, UK, China, Germany, France, Singapore, Hong Kong, Malaysia and India.

 

The author is the CEO of Dubai Financial Services Authority