Winter 2013

ASSOCIATION COLUMN: Built by bonds

Michael-GriffertyGlobal market conditions over the past two years have provided an excellent opportunity for Middle East corporates and government-related entities to issue fixed income. The Gulf Bond and Sukuk Association (GBSA) aims to promote continued access to global capital and to build local markets. GBSA is the member organisation that speaks for the bond industry, sets standards and strengthens the region’s voice in the global arena. With 52 members including global and regional banks, issuers, legal firms, service providers and fund managers, it takes a holistic approach to promoting the region with global investors and growing the regional market. It promotes a regional approach, and would like to see implemented concepts such as a GCC equivalent of Ucits. However, the reality is that most advocacy takes place at national level. It was important in the early years to out establish relations with national governments, central banks and regulators. Now the association has proven to add value to the process of developing policy, it finds the regulators reaching out for dialogue on key issues, a practice that largely didn’t exist a few years ago. Members channel their participation through committees on regulatory affairs, trading, government issuance, investor relations and asset management, and through special working groups. GBSA recently launched a project finance working group that gathers practitioners to promote project bonds to finance hard as well as social infrastructure. Since earlier this year, GBSA’s Islamic finance practice group has provided a ready forum and a market voice on regulatory and national issues facing sukuk in the region. GBSA national working groups have developed specific agendas that they pursue with governments, central and banks and regulators. Topics include lowering barriers to corporate issuance and establishing needed local currency yield curves. The impending roll-out of Basel III is of concern. In response, GBSA’s Basel working group has begun to shed light for its members on how it is being rolled out. It provides input directly to the central banks to ensure roll-out, developed principally in a European context, takes into account the issues related to GCC banks. GBSA recognises that the key to growing the regional market is to develop the investor base. That’s why it is investigating options for savings programmes to supplement the well-known “end of service gratuity” prevalent in the region. Creating a better environment for funds has also been a priority for our advocacy in the UAE, Kuwait and Qatar, the point being that we need to make funds management a good business proposition while still protecting investors. So we deal with concentration limits, registration fees and level playing field issues. Institutional investors and funds are concerned with liquidity of the instruments and reliability of price indications. For that reason, we work with pricing service providers, trading desks and index providers to drive greater transparency. In spite of having “Gulf” in its name, GBSA has extended its involvement further afield, including to Turkey, where it is taking practical steps to support the authorities’ efforts to develop an active sukuk market. GBSA also lends private sector support to the international financial institutions (International Monetary Fund, European Bank for Reconstruction and Development Arab Monetary Fund, and do on) under the G-8 Deauville Initiative to assist the Arab spring countries. Accessing global markets and developing local currency markets will help them deliver growth and employment. No less important than the formal advocacy, best practices and regional initiatives, GBSA members benefit from being part of a leadership community. ©2013 funds global mena

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