Middle East Awards 2013: Asset Servicing Awards

Middle East Awards 2013: Asset Servicing Awards

 

REGIONAL BROKER: MubasherTrade

MubasherTrade is an international trading service operated by Mubasher Financial Services, an investment business firm licensed as Category 1 by the Central Bank of Bahrain. Mubasher Financial Services is owned by the National Technology Group, a large Saudi business group with revenues in excess of $500m.

MubasherTrade is the only trading platform in the world that provides online trading access to all Arab stock exchanges over a single platform. In addition to Arab equities, MubasherTrade also offers access to US equities and options and the London Stock exchange. Selected Asian markets are available as well as Turkey, all via one platform and one log in.

Clients can trade equities, exchange traded funds, options, foreign exchange, commodities and equity contracts for difference and move funds easily between markets and instruments. Mubasher uses the Mubasher brokerage network to execute transactions globally. Ten of the top 13 largest institutions in the world use Mubasher to execute orders on Mena stocks markets.

When trading internationally, one of the constraints is how much it costs to exchange currency to trade the foreign market and convert it back to the client’s home currency. With MubasherTrade clients benefit from discounts on foreign exchange transactions as Mubasher is a large client of its banks for FX purposes.

But MubasherTrade is more than just a leading brokerage. It prides itself on its ability to offer clients the best in-house research straight from the market directly to their email address or mobile phones. Mubasher has built and integrated cutting edge research, monitoring and analysis tools into its platforms and its team of analysts collects data from stock exchanges and listed companies.

In the past five years, the Middle East has gone from 20 million internet users to 77 million, a 294% increase. Mubasher’s management team foresaw the move towards the internet and mobile computing, acting quickly to develop customised applications covering a full spectrum of devices, from basic mobiles to smartphones and tablets.

This type of innovative thinking is why MubasherTrade has been ranked best broker in the UAE two years in a row. Mubasher recently initiated its ‘Share- Post’ programme, which allows clients to invest in fast growing private companies. It also introduced its ‘One Market for All’ initiative, which provides in-depth analysis of companies throughout the Mena region. Finally, it is providing investor seminars to teach clients how to use technology and platforms to make informed investment decisions.



 EXCHANGE: Dubai Gold and Commodities Exchange

The Dubai Gold and Commodities Exchange (DGCX) is synonymous with developing innovative products which add value to the market, from the launch of the first ever steel rebar futures contract to a soon-to-be-launched unique plastic futures contract.

DGCX has recently added another family of products with the launch of BSE Sensex futures contract, as well as the planned introduction of an MSCI index futures contract. The first quarter of 2013 saw the successful launch and volume performance of the much awaited Indian rupee mini futures contract.

In 2012, year-on-year volume growth of 137% was achieved, rising to 204% in the first half of 2013. Year-to-date volumes up to August 23 have passed the 10-million mark for the first time in the exchange’s history and this milestone was achieved in a total of 164 trading days. Total 2013 volumes stood at 10.37 million contracts at the end of August, a rise of 80% from the previous year.

Among other currency contracts, euro futures rose 115% in August from last year. Silver was the standout performer in the precious metal segment with year-on-year growth of 31%.

The DGCX is the region’s first derivatives exchange and the only one allowing participants to clear and settle transactions within the Gulf region. The exchange has played a pioneering role in developing the regional market for derivatives.

With regards to the development of its infrastructure, the end of the first quarter of 2013 saw the first stage in the shift of DGCX’s technology engine to Cinnober, one of the world’s leading trading technology providers.

This advanced platform provides DGCX’s growing member community with superior transaction speed, more efficient means to access liquidity, higher reliability, enhanced trading and clearing flexibility and global connectivity. The upgrade provides low latency network access, world-class risk management, surveillance and clearing capabilities.

The new technology gives the exchange the ability to offer contracts in multiple currencies. DGCX will also be able to offer 24-hour market support on the new platform.

The success of the Indian rupee futures contract on DGCX has prompted attention from a wide variety of investors and membership on the exchange. Large futures commodities merchants such as Berkeley Futures and Marex have recently gained membership of the exchange, while there is a total of 267 members as of end of August 2013.


 FINANCIAL CENTRE: Qatar Financial Centre Authority

The achievements of Qatar Financial Centre (QFC) Authority over the past year include the advance of asset management with the award of a licence to Aventicum Capital Management, a new Qatar-based asset manager that will invest in publicly listed securities in the Mena markets, sustaining momentum from a major strategic partnership announced with Barclays Natural Resource Investments.

Geographical recognition of the QFC Authority’s proposition has continued to broaden, particularly in Asia where the asset management and insurance industries have shown increasing interest in Qatar as a financial centre, helped partly because of visits to Asia by senior QFC Authority representatives. In Qatar, the QFC Authority has continued playing a major part in the development of the country’s rapidly-expanding financial services sector, which now constitutes about 10% of GDP, partly through its role as a think tank.

Licensed firms have continued to grow in number, with a notable and persistent increase in the presence of domestic firms who view QFC Authority as a platform to conduct business in regional and international markets. The total number of active licensed firms has grown from 133 at the start of January 2013 to 141 in September 2013.

Single-family offices and special purpose companies legislation was introduced towards the end of 2012 and significantly widened the range of services the QFC offers Qatari firms and family businesses by making it easier and more attractive for them to establish themselves in the QFC. The special purpose companies legislation creates a competitive platform for companies to launch a sukuk, for example, while clarifying the activities in which holding companies may engage, such as setting up a regional headquarters for a multinational company.

The QFC Authority makes a significant contribution, through its publication of thought leadership reports, to the quality of information available to regional financial markets and hence to the efficiency of those markets.

These reports demonstrated that the insurance, asset management and wealth management sectors are buoyant in the region and continue to have considerable potential. Highlights include Mena Insurance Barometer; Asset Management Barometer; the Dun and Bradstreet Optimism Index and the Mena Reinsurance Barometer.

In early 2013, QFC Authority also promoted a pioneering study into the tax treatment of cross-border Islamic finance transactions within the Mena region. Later this year, the QFC Authority plans to launch the first Asia Reinsurance Barometer in Singapore.


 GLOBAL CUSTODIAN: JPMorgan

The merger of JPMorgan’s Corporate and Investment Bank’s businesses over the last 12 months has been a positive story for its global custody clients. They now have access to an unparalleled global custody platform offering a wider, more integrated set of services including global custody, prime brokerage, collateral management, clearing and treasury services as well as more traditional investment banking services.

The enhanced services and business alignment have been well received by the firm’s largest clients in the GCC including sovereign wealth funds, central banks and pension funds. Other benefits of the merger include cross-business synergies, more streamlined client onboarding, trade execution, reduced costs, consolidated reporting and reconciliation.

JPMorgan has also realigned its clearing, collateral management and execution services under one management structure called Agency Clearing, Collateral and Execution. Through this business, it now offers clients an end-to-end suite of services across transaction types and asset classes. Given the impact of regulations on collateral management, having all businesses under one roof provides regional clients with a single point of contact and therefore streamlines the process.

JPMorgan provides custody to many of the largest institutions across the Middle East and continues to develop long-standing regional relationships through an expanded, dedicated and local custody client service team.

As a leading global custodian, JPMorgan partners with industry bodies, regulators and market participants to stay ahead of regulatory and market trends. It has collaborated with local market players to create innovative, tailored client solutions and improve regional custody delivery.

Specifically, JPMorgan actively engaged with regional clients to help them manage their collateral efficiently ahead of new international regulatory drivers such as Dodd-Frank and Emir. As a result, over the past 12 months, it has onboarded a number of clients in region, including sovereign wealth funds and financial institutions.

A number of key developments in the region lead to a more consultative approach to supporting clients. The new regulatory environment has lead clients to seek JPMorgan’s advice on how best to manage risk, optimise efficiency and implement best practice.

Ahead of the anticipated foreign ownership liberalisation, JPMorgan Saudi Arabia has been at the forefront of a major initiative with the local stock exchange, Tadawul, on the development of an independent custody model. Its expertise on international custody practices was sought and it participated in in-depth discussions to drive changes required to align existing custody models to global standards.


SUB-CUSTODIAN:  HSBC Securities Services

HSBC Securities Services (HSS) Mena is the longest-established international provider of securities services in the Middle East and North Africa. It is the only custodian to offer sub-custody services in all the Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & UAE in addition to Jordan, Lebanon, Palestine and Egypt.

HSS Mena’s client list includes the largest global custodians, broker dealers, local fund managers and sovereign wealth funds. It is the only sub-custodian to have regional and local teams consisting of 110 full-time employees and 46 offshore processing employees, which is significantly larger than other service providers in the region.
 
Dedicated business technology managers in Dubai provide customised and valueadded reporting to clients, which drives internal efficiencies. Local teams in every country with close market contacts are aided by the regional team, who share best practices across the region.

Through regular interactions with market regulators and participants, HSBC Qatar and UAE have been involved since the early stages in key market changes that helped both markets obtain MSCI Emerging Market status effective May 2014.

The changes include introducing buyer cash compensation to avoid the risk of forced cash close out on the seller and developing and introducing regulations for securities borrowing and lending and short selling. Experts from HSBC’s London office met the exchanges and regulators in both countries to share international best practices and provide feedback on the draft regulations.

HSBC Oman is at the forefront of discussions with Muscat Clearing and Depository (MCD) relating to the introduction of delivery versus payment (DVP), having shared the learning and experiences that implemented the DVP settlement process and provided suggestions to the MCD with the intention of achieving consistency across the region.

HSBC Saudi is leading the custodian discussions with the Capital Market Authority and Tadawul on the proposed Qualified Foreign Investor framework, enhancing custodian control in the market and facilitating the settlement procedures for foreign investors.

Despite the challenging political and financial situation in Egypt, HSBC successfully serviced clients without any interruptions. It was able to leverage its strong balance sheet and market connections to source and cover most of its clients’ foreign currency requirements.

Leveraging HSBC local brokerage capabilities in Egypt, HSBC Custody Services started offering a one-stop-shop tender offer service to clients, enabling them to send one instruction for both execution and settlement.

 TRANSITION MANAGER: Citi

The Citi transition management team (CitiTM) has continued to advance its footprint and market share in the Middle East over the past 12 months, successfully completing a record number of large and complex events in the region. Citi has made a strong commitment to the region by hiring new project managers to meet increased client demand.

The transition management team leverages the bank’s extensive network in the region to provide local clients with global solutions while delivering consistently high quality standards of service, technology and support. Events completed in 2013 have spanned the full spectrum of asset classes and were meticulously planned, confidentially managed and executed in line with expectations.

Citi has been in the Middle East for over 50 years and offers full-scale institutional banking services in UAE, Bahrain, Qatar, Kuwait, Egypt, Lebanon and Jordan. This year, Citi became the first US bank to open a representative office in Iraq.

The biggest success of 2013 has been in the portfolio solutions business, where Citi has seen exponential growth in providing guidance and implementation strategies for clients across options, swaps and vanilla beta management overlays. Effective communication makes a significant difference to clients in the Middle East.

Whether a transition is perceived as a success often depends on how well the project was explained and communicated locally. CitiTM believes there is no substitute for having a team member present in the client office throughout the duration of an assignment.

CitiTM is one of the few remaining providers to have an authentic global presence with dedicated transition specialists located in London, New York and Sydney.

It has been providing extensive transition services to global institutional investors since 1989 and a full project management service to a broader client base embracing plan sponsors, pension funds & insurance groups since 1994. The three local CitiTM offices have full access to the Citi franchise, which has trading desks in over 80 countries.

The CitiTM service is viewed as a “core” product offering and enjoys strong senior management support. This service is completely asset class agnostic and has built a very successful business providing portfolio and transition solutions across all asset classes.

It combines the best qualities of a broker-dealer and a custodian/transaction services bank into one integrated transition management platform, This approach allows the bank to handle all aspects of transition management including analysis, project management, trading and settlement without having to outsource any component to a third party


 FUND ADMINISTRATOR: Deutsche Bank

Deutsche Bank established its Direct Securities Services (DSS) business in 2008, starting from UAE and expanding to the Kingdom of Saudi Arabia in 2009. Its service leverages Deutsche Bank‘s expertise in global markets and an integrated set of fund administration, transfer agency and custody systems to provide consistency of information to clients.

The continuously evolving regulatory and market structure in Mena has made it necessary for Deutsche Bank to not only remain at the forefront of developments, but also to keep adapting its products and services to meet the changing market and client requirements. It has done this by pioneering a broad range of differentiated services.

The bank launched a new fund services processing platform that supports sophisticated instruments and offshore securities, enabling it to establish a fund administration processing hub for the region. It has expanded its administration capabilities to include high yield bonds, inflation-linked bonds and other fixed income instruments, supporting long-bias and shorts of future contracts investment strategies in the fixed income arena.

Deutsche Bank has gained recognised expertise in Islamic fund services, complementing its extensive capabilities in structuring Islamic-compliant products.

It provides accounting services in both AAOIFI (Islamic accounting standards) and IFRS and its expertise includes handling listed and unlisted Sukuks, listed and unlisted equities, real estate and property, Islamic money market instruments such as Wakalas and Islamic structured products like the Ar’boon and W’aad structure.

Market advocacy is a key component of Deutsche Bank’s service and product offering in the Mena region and it has been working closely with the Securities & Commodities Authority (SCA) in the UAE and its clients to gain further clarification on the fund services regulations. SCA included various suggestions by Deutsche Bank on the draft regulations.

Deutsche Bank is also working closely with SCA to promote international best practices to develop a world class standard of fund regulation.

Deutsche Bank staff have gained years of onshore experience and expertise. Onthe- ground teams comprise of career fund administration specialists and transfer agents with strong market knowledge. A dedicated product development team focuses on developing integrated solutions to achieve synergies and economies of scale for the client.

Deutsche Bank engages the client at multiple levels of hierarchy with local access to head of DSS client services, Mena and regionally to the head of DSS in Mena. Dedicated relationship managers form a one-point contact to look into day to day queries and overall functioning of the clients activities. Each client is also assigned a designated back-up account manager.


 LAW FIRM: Simmons & Simmons

Simmons & Simmons has offices in the DIFC, Abu Dhabi, Qatar and Saudi Arabia (in alliance with Hammad & Al-Mehdar) and a network of trusted correspondent counsel in all the other jurisdictions in the Middle East. It advises on the full range of legal and regulatory issues for institutional and specialist asset management firms operating in the region and its knowledge in this area is supplemented by a multi-award winning Islamic funds practice.
 
Simmons & Simmons has an established and specialised funds practice based out of the Middle East, which few of its competitors can offer. In addition to advising on the establishment of conventional funds, it also advises on the establishment of Shariah-compliant funds and regulations relating to marketing and selling funds and other investment products across the region.

The partner leading the practice, Muneer Khan, has extensive experience of advising on Islamic financing structures, with a particular focus on Shariah-compliant investment funds and their financing arrangements, structured investment products and sukuk. He has many years of experience in advising several of the world’s leading financial institutions in the area of Islamic finance and has developed a close working relationship with several of the world’s leading Islamic finance Shari’a scholars.

The firm’s online product, Navigator, is a service that covers the distribution of open ended funds, distribution and dealing in securities, share disclosure and short selling and OTC and exchange-traded derivatives. This unique offering covers the entire GCC as well as most of the wider Middle East.

The information contained in this subscription- only product is updated on a quarterly basis by Simmons & Simmons lawyers in the Middle East and provides a valuable resource on Middle East funds regulation for asset management sector clients around the world. An increasingly large number of clients in the Middle East are subscribing to Navigator and see it as an essential resource for initial regulatory advice.

Simmons & Simmons has recently developed a new publication entitled the ‘sukuk Toolkit’. This is a unique and detailed guide to structures, market practice, regulation and case studies in the growing area of sukuk and is particularly useful for investors (including hedge funds) in—and issuers of—sukuk.

The firm’s experience over the last year in the Middle East specifically has included advising SEDCO Capital on the development and successful launch of a one-stop-shop investment platform of Shariah-compliant funds domiciled in Luxembourg and regulated as a specialised investment fund and advising the government of the Maldives on how to develop a domestic market.