In an important international conference on capital markets in Cairo, Dr. Habib Al Mulla, DFSA Chairman called for all markets ‘to strive for continuous improvements in investor protection measures’. The conference was held under the auspices of H.E. Dr. Ahmed Nazif, The Prime Minister of the Arab Republic of Egypt.
In comparing and contrasting the investor protection index results from the World Bank ‘Doing Business Survey’, Dr Al Mulla analysed the new and international markets like the DIFC with the more traditional and national markets, operating in Egypt and the UAE.
Egypt and the UAE had the same overall Strength of Investor Protection Index of 4.3 which is lower than the OECD index of 6. He explained that the index rating ranges from 0 to 10 with 10 reflecting the optimum index, pointing out that ‘the UK and USA carry an 8 and 8.3 Strength of Investor Protection Index respectively. This is well above the OECD index of 6’, he added. Dr. Al Mulla challenged his audience to ‘cooperate and chase the 10-Index as an end goal in rapidly globalising markets’.
Dr. Al Mulla said: ‘In the Globalisation scenario, we must be able to attract investors to transparent, orderly and fair markets – and to protect them; protecting investors is the cornerstone of successful capital markets. The DFSA has modelled its legislation on the UK and USA, using international best practice’, he added.
In his presentation Dr. Al Mulla explained that the DFSA can act quickly to ensure both laws and rules remain up-to-date in terms of international best practice, stating: ‘the DFSA is constantly striving to maintain up-to-date measures to ensure sound corporate governance, disclosure, transparency and investor protection’.
In concluding, Dr Al Mulla stated: ‘Investor Protection, and the goal of the 10-Index, will separate the good markets from the ordinary in the globalisation scenario.
The DFSA is open to cooperation and has entered into a number of Memorandums of Understanding with authorities and standard-setting bodies around the World to further this aim.
We stand committed to investor protection as a primary measure of success in a globalising world; we will continue on route to the 10-Index’.
The Dubai Financial Services Authority (DFSA) is an independent, integrated regulatory authority responsible for the regulation of all financial and ancillary services conducted in or from the Dubai International Financial Centre (DIFC), including asset management, banking, securities trading, Islamic finance, re-insurance, and an international financial exchange. The DFSA has been created using principle-based primary legislation modelled closely on that used in London and New York, and the DFSA regulatory regime operates to standards that meet or exceed those applying in the world's major financial centres.
The Dubai Financial Services Authority (DFSA) is a central component of the DIFC, a new financial centre established to position Dubai as a recognised hub for institutional finance, and the regional gateway for capital and investment to the Middle East.
Dr Habib Al Mulla was appointed Chairman of the DFSA in June 2004. Dr. Al Mulla holds an LLB in Shari’a and law from the UAE University; LLM from Harvard Law School and a Ph.D. from the University of Cambridge. He is also the Managing Partner of Habib Al Mulla & Company, a leading law firm based in Dubai. Dr Al Mulla has been a Member of the UAE Federal National Council since 2002.
The ‘Doing Business’ database provides objective measures of business regulations and their enforcement. The Doing Business indicators are comparable across 175 economies. They indicate the regulatory costs of business and can be used to analyze specific regulations that enhance or constrain investment, productivity, and growth.
The Survey indicators describe several dimensions of investor protection: Transparency of transactions (Extent of Disclosure Index), Liability for self-dealing (Extent of Director Liability Index), Shareholders’ ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and The Strength of Investor Protection Index. Each index varies between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection.
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