Thursday, Jul 18, 2024
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 151,69  ↑+0.174        USD/KRW 1.347,35  ↑+6.1        EUR/JPY 164,16  ↑+0.143        Crude Oil 85,49  ↓-0.76        Asia Dow 3.838,83  ↑+1.8        TSE 1.833,50  ↑+4.5        Japan: Nikkei 225 40.846,59  ↑+448.56        S. Korea: KOSPI 2.756,23  ↓-0.86        China: Shanghai Composite 3.015,74  ↓-15.745        Hong Kong: Hang Seng 16.512,92  ↓-105.4        Singapore: Straits Times 3,27  ↑+0.018        DJIA 22,58  ↓-0.23        Nasdaq Composite 16.315,70  ↓-68.769        S&P 500 5.203,58  ↓-14.61        Russell 2000 2.070,16  ↓-4.0003        Stoxx Euro 50 5.064,18  ↑+19.99        Stoxx Europe 600 511,09  ↑+1.23        Germany: DAX 18.384,35  ↑+123.04        UK: FTSE 100 7.930,96  ↑+13.39        Spain: IBEX 35 10.991,50  ↑+39.3        France: CAC 40 8.184,75  ↑+33.15        

United vision and collaboration pave the way for enhanced regulatory reform

Article - October 31, 2016

The combined efforts of the Qatar Central Bank, the Qatar Financial Markets Authority and the Qatar Financial Center Regulatory Authority are creating a coordinated approach to develop financial regulatory infrastructure that meets international standards and best practices


Financial regulatory reform in Qatar has seen improvements over the last several years that promise to help the future growth of the economy in line with the hopes and dreams of the National Vision 2030. The collaboration between the three main regulatory authorities provides a stage to demonstrate an international example of new global economic opportunities in the region. Global and regional considerations are at the forefront of development in diversifying the Qatari economy and broadening progress in the financial sector.

Established in 1993, the Qatar Central Bank (QCB) is the primary regulator of financial institutions inside the state and is working in tandem with the Qatar Financial Center Regulatory Authority (QFCRA) and the Qatar Financial Markets Authority (QFMA) to further secure a more effective regulatory framework that will construct strength and resiliency in the financial sector as a whole.

“A strong and resilient financial system is the foundation of every economy,” says Michael Ryan, CEO of QFCRA. “Meeting the challenges of exceptional growth demands vision and focus, and that has been a particular strength for Qatar’s financial regulators.” Mr. Ryan brings to the QFC Regulatory Authority his rich expertise, having served in a number of senior management positions at Bank of America Merrill Lynch and Credit Suisse Financial Products, as well as serving on the Irish prime minister’s advisory committee on financial services.

Together these three regulatory bodies have developed the first Strategic Plan for Qatar, focused on defining the values and objectives that will be carried out with the predicted economic growth.

The Strategic Plan has six critical goals, which include strengthening the financial market infrastructure through enhancements to the payments and settlements system, and initiatives to develop the debt market. It is also aiming to enhance consumer and investor protection by developing standards and codes of conduct. The plan additionally seeks to protect credit information and to raise public awareness and education. The organization’s aim is to expand macro-prudential oversight by building a framework that is in line with international best practices. It seeks to develop a consistent risk-based micro-prudential framework that coincides with global regulatory progression and improves disclosure practices.

Economic reform is one of the four pillars of the Qatar National Vision, but leaders in the financial sector realize that a holistic, human-centered approach is the way in which reform will continue to make the state a viable market for international investments. In April, the plan to create a specialized center to combat money laundering and funding of terrorism was announced at the Middle East and North Africa Financial Action Task Force meeting. The center will work to raise awareness that will reach far beyond Qatar. The country’s vision to grow economically is correlated with the concerns for the international community and the detriment that terrorism places on financial stability and security in affected regions. By positioning Qatar as a prominent contributor in the combat against the kind of funding that perpetuates these crimes, the state is improving its international position as a stable market that maintains integrity and transparency in its financial exchanges.

The recent formation of the College of Supervisors will help carry out the Strategic Plan by facilitating further cohesion between the QCB, QFCRA and QFMA with a group of senior managers from all three institutions. These regulatory authorities have already begun to put change in place with new laws.

The new QCB Law No. (13) of 2012 introduced specific provisions addressing the licensing and supervision of insurance businesses, protection of credit information, merger and acquisitions of financial institutions, settlement of disputes, sanctions for those who conduct financial services activities without required licenses, consumer protection and customer confidentiality, and regulation of Islamic financial institutions.

QCB is established as the central authority in the implementation of the policies relating to regulation, control and supervision of financial services and markets in the state. It also gave an expanded focus to the macro-prudential framework in Qatar by creating the Financial Stability and Risk Control Committee (FSRCC), which is responsible for identifying and assessing risks to the financial sector and markets, and then proposing recommended solutions for such observations. The FSRCC also proposes policies related to regulation and supervision of financial services businesses and markets. Work done by FSRCC coordinates the regulatory authorities and minimizes the gap between the organizations so that all work toward a unified vision in the financial sector.

As Governor of QCB and Chairman of the QFCRA and QFMA boards, Sheikh Abdullah bin Saud Al-Thani says, “A number of important regulations, based on Basel III, have been issued to strengthen the banking sector in recent years. In addition to capital standards, maintenance of liquidity coverage ratio, net stable funding ratio and loan-to-deposit ratios, as well as capital charges for domestic systemically important banks (D-SIBs), etc., are prescribed.”

Due to these kinds of improvements, Qatar has continued to receive high credit ratings and has been upgraded to “emerging market status” by several agencies.

Other regulations since 2012, like the QFMA Law No. 8, have given this organization more responsibility in the protection of investors, maintaining fair and efficient financial markets, pursuing professionalism and transparency in the market’s integrity, and policing misleading information related to financial services. Mr. Al-Thani also describes the new Law No. 2 of 2015 that was in enacted to “modernize the state financial system as well as align with the developments in the global economic and financial system” as being “expected to enhance the efficiency of public spending by tracking income and expenses accurately and continuously.”

He adds, “The law constitutes a comprehensive audit policy and intends to improve the coordination between various stakeholders in the processes of preparing and implementing the budget.”

The initiatives that have been put in place over the last few years are now officially under way. “In January 2014, the QCB issued the final Basel III circular, which introduced a minimum capital adequacy ratio of 12.5%. National banks have also been evaluated on the extent to which they are domestic systemically important banks (D-SIBs). These D-SIBs are required to maintain capital charges of 0.5% to 2.5% in different D-SIB buckets. These instructions will be implemented in 2016 in a phased manner,” says the governor.

The regulatory reform by the QCB, QFCRA and QFMA has begun to create an economic environment in line with the rest of the developmental goals of Qatar. The many new sanctions that have been put in place are showing an improvement in investment from international companies working to help prepare Qatar for the 2022 FIFA World Cup. Putting these regulations in place, diversifying the economic interests and focusing on building human capital is molding Qatar into the stable, knowledge-based economy that its leadership sees for a sustainable future.