Investment Funds Conference

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• Investment Funds Conference
• Collective Investment Funds in the Qatar
  Financial Centre Confidence and Opportunity
• November 26-27, 2007
• Michael Webb
• Managing Director, Financial Sector Development
  and Policy
• Qatar Financial Centre Regulatory Authority

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The Qatar Financial Centre

• The Qatar Financial Centre (QFC) is the onshore
  financial market in Qatar established in 2005 to
  support the ambitious investment programme of the
  government of the State of Qatar, and to bring
  added depth and breadth to Qatars financial
  sector and the region as a whole.
• The QFC Regulatory Authority (QFCRA) regulates
  financial services carried on in or from the QFC,
  including asset management.

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QFC - the legal and regulatory template

• Clear constitutional arrangements The QFC and
  its key entities were established by primary
  Qatari statute. QFC authorised entities can
  operate in the State of Qatar, and do business
  with Qatari corporations and individuals.
• Modern laws A full suite of civil and commercial
  laws have been implemented with drafting based on
  the laws of leading common law jurisdictions.
  More laws are being developed to meet industry
  needs.
• A separate and independent QFC Civil and
  Commercial Court The Court has been established
  to adjudicate between parties relying on those
  new QFC laws. Alternative forms of dispute
  resolution are encouraged.
• Full access to markets The law establishing the
  QFC imposes no restrictions on the type of
  financial services business that can be done by
  QFC authorised entities.

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QFC - the legal and regulatory template

• An Integrated Regulator The QFC Regulatory
  Authority was established as an integrated
  regulator, providing supervision of all forms of
  financial services activity. Much of the
  operation of the Authority is based on the
  approach of the UKs Financial Services
  Authority.
• Regulatory Independence The Regulatory Authority
  was designed to be fully independent, with its
  own international Board drawn from leading
  regulatory bodies, and the Board in turn reports
  directly to Qatars Council of Ministers.
• International Cooperation The Authority has been
  given powers to cooperate fully with its
  international counterparts and enter into
  information sharing arrangements for the purposes
  of supervision and enforcement.
• Adopting International Standards Entry into the
  QFC regime is open to any institution that can
  demonstrate that it can meet the standards for
  admission and will be able to maintain those
  standards.

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The QFCRA Collective Investment Funds regime

• The QFCRA collective investment funds regime came
  into force in July 2007
• The detailed rules are set out in the Collective
  Investment Funds Rulebook (COLL)
• This followed an extensive public consultation
  process.

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Why regulate funds?

• Investors are not directly in control of their
  investments or investment decisions and
  consequently need assurances that their funds are
  being managed appropriately and they are being
  treated fairly.
• Unregulated funds may also be exposed to
• increased money laundering risk
• complex structures ownership/control
• lack of control over money inflows and bank
  account arrangements
• no investment restrictions and
• lack of requirements regarding protections
  (custody/trustee oversight).

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Types of funds allowed under COLL

• Qualified Investor Funds
• Business Customers Market Counterparties only
• Private Placement Funds
• Less than 100 investors
• Exempt from a number of COLL provisions, e.g.
• requirement to appoint an independent
  entity/custodian
• investment and borrowing restrictions
• Retail Funds
• Currently not permitted
• Foreign Funds
• Freely marketable (subject to financial promotion
  rules).

Qatar Financial Centre Regulatory Authority
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COLL - overview

• QFCRA regulates QFC funds (Registered Funds)
  through the operator
• QFCRA Authorised Firm
• Responsible for registering fund
• Regular, clear and concise reporting to investors
• Appoints Independent Entity, Administrator, etc.
• Compliance with COLL Rules
• Regulation of operator is supported by oversight
  functions undertaken by independent entity
• Safekeeping Oversight
• Can be based outside Qatar
• QFCRA regulates the sale/marketing of foreign
  funds through regulation and authorisation of the
  Authorised Firm doing the selling/marketing.

Qatar Financial Centre Regulatory Authority
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The main functionaries

• Operator the QFC Authorised Firm responsible for
  establishing (incl. registering) and operating
  the fund. Commonly referred to as the fund
  manager.
• Operator can outsource functions but not to the
  Independent Entity
• Independent Entity the firm responsible for the
  custody/safe keeping of the fund property and for
  overseeing the operations of the Operator. If the
  IE is in the QFC it must be an Authorised Firm.
• Independent Entity can outsource functions but
  not to the Operator
• Administrator the firm responsible (if appointed
  by the Operator) for the administration of the
  fund on behalf of the Operator. If the firm is in
  the QFC it must be an Authorised Firm.

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• The next step a fully integrated regulator for
  Qatars financial services

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A fully integrated regulator for Qatars
financial services

• On 16 July 2007, the Government of Qatar
  announced that Qatar was to create a fully
  integrated, best practice regulatory and legal
  environment for financial services.
• A single integrated financial regulatory body is
  to be established that will oversee all banking,
  insurance, securities, asset management and other
  financial services.
• Qatar is following an international trend towards
  an integrated approach, on the basis of the
  significant benefits that accrue from such an
  approach including
• Greater transparency and predictability given a
  simplified institutional landscape
• Greater efficiency through a pooling of scarce
  regulatory staff
• Ability to take a comprehensive view of financial
  institutions active across different lines of
  financial activity.

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An integrated Regulator

• The new regulatory body will be fully
  independent, with management accountable to a
  board constituted of international and Qatari
  financial services regulatory experts.
• The new regulator is expected to be in place in
  2008.
• A common set of high standard rules applying to
  all financial service providers in Qatar will be
  rolled out over a more extended period to allow
  institutions that need to adapt to new regulatory
  standards sufficient time to put in place the
  resources.