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Lynton Jones,
Chairman, DIFX |
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Steffen Schubert,
Chief Executive Officer, DIFX |
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Nasser Al Shaali,
Chief Operating Officer |
The Americas have New York, Europe has London and
Asia has Hong Kong as a hub for stock, bond and
derivatives trading. With the launch of the DIFX,
Dubai plans to play that role for oil-rich Arabia
and the surrounding area. The Dubai International
Financial Exchange (DIFX) plans to open for business
in September 2005 – an international bourse
that aims to fill the financial void between the
time zones of London and Hong Kong.
Today, the oil-rich Arab world is home to some of
the most vibrant, fast-growing economies on earth,
but it is still waiting for a dominant financial
focal point to emerge.
More than a dozen independent exchanges scatter
the region, but none has emerged as a truly international
financial center, and most retain restrictions on
foreign investment.
The DIFX aims to change that.
“The DIFX will be unique in this region because
of its international standards, which are designed
to create confidence in its market,” says Steffen
Schubert, Chief Executive of the DIFX. “This
will encourage companies right across the region
to list on the exchange, and international investors
will look at the region with more interest than
ever before.”
The exchange says that it is talking to dozens
of companies in many different countries that are
interested in listing shares, bonds and other securities,
in sectors ranging from financial services and construction
to IT and pharmaceuticals. One major company that
has said publicly in recent weeks that it might
raise money on the DIFX is Etisalat, the UAE’s
national telephone operator, which has significant
international interests. A number of other substantial
companies are interested in doing an initial public
offering of shares on the DIFX.
“The DIFX will provide advantages for its
participants that will be unprecedented in its region,”
says DIFX chairman Lynton Jones. “They include
international standards of regulation and easy access
to first-class regional issuers who are seeking
global capital for the first time.”
Location, Location, Location
The DIFX’s location in Dubai, one of seven
emirates that make up the United Arab Emirates and
the Arab world’s undisputed trading hub, is
a big advantage. Dubai is home to the region’s
busiest ports and airport, as well as a thriving
tourism industry. At the same time, it’s the
location of choice for regional head offices of
most multinational companies including Citigroup,
General Motors and Microsoft.
The DIFX is part of Dubai International Financial
Center (DIFC), a project that officially launched
in September 2004 and is already home to some of
the world’s leading financial institutions.
Merrill Lynch, Credit Suisse, Mellon Global Investments
and Standard Chartered are among more than a dozen
institutions to have joined in recent months, eager
to tap into the region’s fast-growing economy.
“We have been active in this region for over
forty years and I look forward to a long and prosperous
future operating from within the DIFC,” said
Bruno Daher, Managing Director and Market Executive
for the Middle East at Merrill Lynch.
Jon Little, chief executive officer of Mellon Global
Investments, added: “Mellon already manages
over US$5 billion for investors in the Middle East
and we expect this move to the DIFC to bring further
expansion of our business.”
Over 50 other institutions are knocking at the
door of the DIFC, with HSBC and Barclays of the
United Kingdom having publicly stated their intention
to join in 2005.
The development of the DIFC should have a positive
impact on the DIFX, which hopes that many of the
financial services firms that move in will also
want to do business on the exchange. The DIFX is
in detailed talks with many of the world’s
biggest investment banks about membership.
More than 40 banks attended a DIFX conference in
London in May, learning about its market model and
the opportunities it will give investors. Michael
Philipp, a non-executive director of the DIFX, who
is also chairman and chief executive of CSFB Europe,
the Middle East and Africa, addressed the conference
along with DIFX executives.
Finding the Right Team
The DIFX has built the foundations for success by
working with best of breed partners in all aspects
of its operations, from key management figures to
technical players. Chairman Lynton Jones has held
senior positions with the London Stock Exchange,
NASDAQ International and the International Petroleum
Exchange, while chief executive Steffen Schubert
has headed both EASDAQ in Brussels and the Bavarian
Stock Exchange in Munich. The DIFX will be regulated
by Dubai Financial Services Authority (DFSA) –
a new and independent regulator headed by David
Knott, former head of the Australian Securities
and Investments Commission.
On the technical side, AtosEuronext will provide
the industry standard trading platform. “We
are very pleased to have been chosen by the DIFX
to provide it with NSC, our fully electronic trading
platform used in more than 15 exchanges throughout
the world,” says Dominique Brutin, chief executive
of AtosEuronext. “AtosEuronext’s unrivalled
expertise will assist the DIFX in becoming a leading
international financial exchange.”
The currency of the exchange will be dollars, there
will be no restrictions on foreign ownership of
shares or other securities, and its language of
operation will be English. For all these reasons,
the DIFX is attracting worldwide attention from
all links in the financial market value chain: issuers,
investors and intermediaries.
Potential issuers from the UAE and wider Arab World
– as well as the booming Indian economy, which
is just a two-hour flight from Dubai – anticipate
plenty of advantages from a listing on the exchange.
Not least is a favorable price for their securities,
produced by the high levels of liquidity that they
believe the market will offer.
“The DIFX’s focus on one of the world’s
most exciting economic regions, its location in
a financial free zone, and its state-of-the-art
clearing and other technology are tailor-made for
the global financial community,” says Jones.
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