Hedge Funds Need to Abide by a Clear Set of Best Practices to Regain Investor Confidence, Says HE Dr. Omar Bin Sulaiman

DIFC Governor Speaks at Hedge Funds World Middle East 2009

Hedge Funds need to develop and abide by a clear set of best practices to regain the confidence of investors which has been affected by the failure of certain funds over the past year, HE Dr. Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC) said today. He was speaking at the 10th Annual Hedge Funds World Middle East conference, which opened in Dubai today.

“To emerge healthier from the financial crisis, hedge funds need to adjust to the realities of the new emerging financial architecture. Most importantly, in their own interests, hedge funds need to develop and abide by a clear set of best practices. To regain the confidence of investors, it is vital that they should effectively address the issues of investor disclosure, valuations, risks and corporate governance.” he said at the conference.

The global financial crisis provides a great opportunity for the Middle East to learn from the issues that western financial markets are facing, HE Dr. Omar Bin Sulaiman said. He stressed on the need for corporate governance and regulatory frameworks in the region to address the risks and vulnerabilities that the global financial crisis has revealed.

“There is an urgent need for the industry in the Middle East to identify the optimal regulatory environment that is conducive to the long-term growth and stability of all investment classes, including hedge funds,” he said.

From a very early stage, Dubai International Financial Centre has taken a proactive role in addressing the issue of risk-based regulation for hedge funds, said HE Dr. Omar Bin Sulaiman.

In 2007, DIFC’s independent regulator, the Dubai Financial Services Authority (DFSA), created a landmark code of practice for the hedge funds industry - the first regulator anywhere in the world to have taken such a step. “This code reflects our commitment to risk-based regulation by addressing some of the specific risks associated with hedge funds,” said the Governor of the Dubai International Financial Centre.
The code has nine high-level principles, covering operational, management and market-related risks, particularly in areas like the valuation of assets, back-office functions and exposure to market risks.

Apart from a strong regulatory framework, DIFC also provides hedge funds the infrastructure and services that allow them to run their entire business from the financial district. DIFC offers custody and administration services, domicile, legal and support services and protective regulation that allow hedge funds to combine all their front- and back-end services in one location.

Being held at the Madinat Jumeirah, in Dubai, from 10 to 11 March, 2009, under the patronage of HE Dr. Omar Bin Sulaiman, Hedge Funds World Middle East is the largest regional event for alternative investment vehicles and hedge funds. Aimed at local institutional investors as well as international portfolio managers, asset managers and hedge fund managers, the event delivers the latest investment knowledge, strategies and critical market intelligence on hedge funds.