"The CISI’s role in the region and globally is to increase professionalism amongst financial services practitioners, through qualifications, membership and ongoing learning," says the CISI Chairman.
"Last year we conducted over 3,000 computer-based exams in the region, covering a range of disciplines from rules and regulations exams, wealth management and Islamic finance, through to risk, derivatives and compliance. We also serve to promote the highest levels of ethical conduct. All CISI members now have to complete an integrity and ethics test prior to joining the CISI, to reinforce the expectations we and their customers have of their conduct."
Question time
What do you do differently for this region compared with others?
"The CISI, as an organisation incorporated under a Royal Charter, is a charity. This enables us to provide benefits to the community that may not be commercially attractive for other providers. We are fortunate that over 700 practitioners voluntarily help us, which ensures that our qualifications are up to date and relevant. We work closely with Gulf Co-operation Council (GCC) regulators, such as the UAE Securities & Commodities Authority, Qatar Financial Markets Authority, Qatar Financial Centre Regulatory Authority, Muscat Securities Market and others to develop regulatory exams, which we then combine with globally portable qualifications. This enables practitioners to benefit from best global practice, whilst being able to demonstrate competence in local regulatory requirements. Many of our qualifications in this region are available in Arabic – indeed we offer more qualifications in Arabic than any other language, other than English."
How does the balance of institutional versus retail investors compare in this region alongside other regions? How does this impact your activities?
"In the UK, there is an even balance between institutional and retail, whereas in the Gulf the focus is on the retail sector."
Is the growing presence of foreign institutional investors a good thing for reducing volatility in regional markets or does it make the region more tied to changes in global risk appetite and prone to more short term swings?
"There is always, of course, a risk that foreign institutional investment will be less 'sticky' than regional capital. But there have been some significant strides forward in the region – notably by Qatar and the UAE – in moving up the scales of the key global index providers, FTSE and MSCI, from frontier to emerging market status and beyond. This in itself will attract longer-lasting investment in higher-grade markets."
What can regulators do to improve transparency of markets in this region and improve protection to minority shareholders?
"Much good work has already been done in the Gulf on transparency and particularly in the field of governance, where Hawkamah, for instance, has provided valuable thought leadership and practical guidance. In the West, we have long been aware, and particularly in the wake of the financial crisis, that banks’ risk governance frameworks have proven inadequate to the tasks of explaining and controlling the risks resulting from their strategic choices and business model. The boards of Gulf financial institutions have taken important steps towards discharging their strategic and governance responsibilities to both regulators and shareholders. Moving family-held businesses into public ownership, a trend that will grow in the Gulf, is always fraught with governance complications, but much good groundwork has been laid."
What can be done to encourage training and recruitment of local nationals in the securities and investment industry: we see minimum local staff requirements in for example, Riyadh but not the Dubai International Financial Centre?
"The first issue to address is how to encourage local nationals into the private sector, rather than the traditional route of public sector working, and a minimum quota is one option. It is better to have more positive incentives, such as providing a financial subsidy, therefore the quality of staff is assured. In our experience, most companies are doing a good job in attempting to hire local nationals. As a charity, we work with many federal or charitable organisations across the GCC, which exists to provide access to learning and skill acquisition for local nationals. One such example of this is the UAE’s Securities and Commodities Authority (SCA) which mandates a series of CISI qualifications to licensed individuals. Any UAE national, whether currently in the profession or not, can take all the required CISI exams to become a financial analyst, trading manager or broker representative, with the entire cost funded by SCA. The CISI has also recently launched an Arabic Fundamentals of Financial Services, which is a more junior level qualification designed to bridge the gap between education and employment."
This interview is reproduced from Banker Middle East, published by CPI Financial