Mashreq Capital CEO disappointed by DIFC role

The chief executive of Mashreq Capital has called on the Dubai International Financial Centre (DIFC) to become more proactive in selling itself in order to help the centre’s budding fund industry.

Few investors are aware of the benefits of a fund being regulated by the DFSA (Dubai Financial Service Authority), Abdul Kadir Hussain said at a DIFC seminar on fund management on Wednesday.

“I don’t think one of them has come out and said ‘Oh, wow this is a DFSA regulated fund? Great, I’m putting my money in it!’” he said.

To date, the DFSA’s stringent criteria have been more of a burden than an asset for Mashreq, which launched the first ever fixed income hedge fund at DIFC in 2006.

“It was disappointing, because we went through the [authorisation] process. It is an onerous process, but we thought it was worth it,” Hussain said.

While the DFSA’s world class regulatory disclosure process has made Mashreq “feel a lot more comfortable”, it is not something the company has been able to use as a selling point.

“The investor is not going to want to hear that from us. We’re there to take his money, so he clearly is going to think that we have a biased perspective.

“We need more help from the DIFC and DFSA to go out there and say…why we are better than everybody else.”

Dubai is still seen as a high risk jurisdiction by major investment banks when DIFC funds want to set up accounts with them, he added.

“Dubai shows up on some list that most of these firms have as a high risk region,” he said.

“In terms of promoting itself and promoting the fund industry and establishing itself as centre, I think that both the DIFC and the DFSA have some more work to do.”

The DIFC is predicting strong growth in mutual funds as volatile stock markets boost demand for diversified investments.

But it faces strong competition from Bahrain, which has emerged as a centre for the Gulf’s fund industry.

As of April this year, the Kingdom was home to more than 2,483 registered funds, out of which 108 were Bahrain domiciled schemes.

More than 1,400 domestic and foreign funds were marketed and sold in DIFC as of the first quarter of this year.

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