Fund Domiciles

Qatar is looking to become a centre for portfolio management in the Gulf. In stating that it would like to develop a portfolio management capability in Doha, as well as being a destination for regional asset manager marketing operations and fund industry service providers, it is taking a different approach to the development of fund management activities from some other domiciles.

In particular Qatar is in the process of expanding its financial services infrastructure to serve the needs of its own indigenous investors (governmental, institutional and retail). It wishes to be a regional hub for asset management too but the strength of the country's economy, and the assets that Qatari investors will have to allocate, gives it a strong local card to play.

Qatar is on course to be the world's leading exporter of liquefied natural gas. By 2010 natural gas output will be at full production. By then it will be the world's biggest producer of this commodity by a factor of two. Qatar, which has an official population of 744,000 but whose real population is about twice that size, has enough natural gas to keep production going for the next 200 years. "They are very seized by the fact that this is an important time for them and that they are the custodians of the future," says Phillip Thorpe, Chairman and CEO of the Qatar Financial Centre Regulatory Authority (QFCRA).

For this reason the plan is to diversify the economy into new areas, particularly into financial services. "We are supporting the ambition of the state of Qatar to develop into an industrialised economy by helping to grow and deepen its financial services sector," says Stuart Pearce, head of Qatar Financial Centre Authority. In other words Qatar wants to turn Doha into an onshore financial services centre of choice, as opposed to a free zone such as DIFC, underpinned by the same rules, regulations and standards as leading international financial jurisdictions. It plans to develop an infrastructure to serve the all local investors - institutional and retail alike - as well as a base for the region as a whole. It is worth emphasising that the local market is not just governmental or institutional. There is a potentially substantial retail market too. Qatar has one of the highest GDP per heads in the world and the economy is growing at 20 percent a year.

In order to develop its financial services infrastructure the Government of Qatar created the Qatar Financial Centre (QFC) in 2005. Shortly after the Qatar Financial Markets Authority (QFMA) was established, in 2006, to regulate the securities sector. And back in 2007 Qatar announced the decision to move towards a single integrated financial regulatory body that will oversee all banking, insurance, securities, asset management and other financial services. "This new set of rules allows QFC institutions to introduce a new range of investment products to Qatar. In turn, this should allow investors enhanced opportunities to diversify their portfolios, and bring added stimulus for growth to the collective investment industry in Qatar," says Phillip Thorpe.

So there will be one set of standard rules applicable to all financial institutions - in other words a single regulator, like the FSA.

Fund managers do not have to perform all functions locally but they do have to have an office on the ground providing a number of functions. The QFC had issued 89 licences by the end of August 2008. These include licenses to institutions like AXA, Barclays, Citi, Goldman Sachs, UBP, UBS and most recently State Street.

And Qatar's goal of becoming an important capital markets centre was given a boost in late June when it was announced that NYSE Euronext was to acquire 25 percent of the Doha Securities Market. The intention of this deal, to be finalised in the fourth quarter of 2008, is to build an integrated cash and derivatives exchange in Doha.