Listening closely as Abu Dhabi Global Market slowly takes shape

However, the absence of any public activity does not mean lack or progress. The message always was that the ambition to build a world-class financial free zone in the capital would be a gradual task.

Al Maryah Island, the home of the Abu Dhabi Global Market, is like a huge swan floating on the Arabian Gulf waters: tranquillity and grace on the surface, energetic activity beneath.

Not much has been publicly heard about the plans for the UAE’s new financial free zone for some time; the last public announcement was a the publication of a memorandum of understanding with the Central Bank back in April.

However, the absence of any public activity does not mean lack or progress. The message always was that the ambition to build a world-class financial free zone in the capital would be a gradual, cautious and painstaking task. Ahmed Al Sayegh, the chairman of the ADGM whose job it is to oversee its construction, has taken that message to heart.

But big ideas cannot exist in a vacuum, and if Abu Dhabi wants to create an truly international financial hub, it has to listen to what the rest of the world thinks about the idea and, where appropriate, include that input in the design of the centre.

That is what has been going on in the past several months, with a renewed intensity since the end of the summer break. Global market executives have gathered together an informal “focus group” of potential stakeholders in the project. There has been a lot of listening going on at Al Maryah.

The focus group consists of a group of about 18 organisations, representing the elite of the Abu Dhabi financial infrastructure, of course, but more importantly providing a cross-sample of global financial thinking. Executives from some of the leading names in American, European and Asian finance are there.

They have learnt of Abu Dhabi’s reasons for launching the project: the desire to make the UAE a global financial marketplace, complementing the financial hub that already exists in Dubai, and the capital’s long-term economic strategy.

They have learnt that the centre will be firmly in line with the capital’s financial traditions: solidity and conservatism allied to huge financial muscle. They have been made aware of the emirate’s tradition of shrewd financial management, going back to the foundation of the Abu Dhabi Investment Authority in 1976.

The informal gathering of the financial elite has also been given some indication as to the new centre’s priorities. Although it has a remit under federal law to provide services across the full spectrum of the financial and investment sectors, it will concentrate in the first phase at least on what it regards as Abu Dhabi’s expertise: private banking, and asset and wealth management.

The rest – the full gamut of commodities and equity trading, as well as investment banking and advisory services – may come later as part of a decade-long plan to make Abu Dhabi a global financial hub. But no new stock or commodity markets will simply be invented in the capital.

This is shrewd strategising by the market’s comparatively small but growing band of hired executives. For one thing, in the world post-financial crisis of 2009, private banking and wealth management have come under increasing scrutiny of regulators in the US and Europe. It is important to get the feedback from leading foreign financial professionals in those tricky areas.

It is a clever piece of marketing. As the same institutions who form the informal focus group will likely be among the first participants in the market, it is sensible to make them insiders at an early stage, and allow them a say in shaping its basic structure.

The focus groups have also been assured on one central premise at the core of the new market: that it will have a court system consisting of an independent judiciary, run under common law principles in English.

Another basic pillar of the market is approaching completion, with the plans for a registry function well advanced. Expect news of executive appointments in this area soon.

Early next year, the ADGM authorities expect to be able to throw open the informal consultation process to the full range of financial institutions who will be stakeholders in the market.

In one crucial area — regulation — there is still some work in progress. The ADGM does not want to simply cut-and-paste on this vital function. Rather, it wants to ensure a regulatory set-up that is tailor-made for Abu Dhabi, but incorporating international best practice.

But that is for another column.

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