International corporate houses, including those from the New Economic Belt Initiative (NEBI) countries, will soon be able to tap Doha's capital market as part of Qatar’s strategy to open up the markets, according to a top official of the Qatar Financial Center (QFC).
Moreover, the Qatar Central Securities Depository (QCSD) is being suggested to ink partnerships with global clearing and settlement houses for enabling passporting of funds.
"While the initial emphasis will be honed on the needs of local corporates and public sector entities, Qatari capital markets will soon be able to cater to international investors as well as our NEBI partners," QFC Authority chief executive Yousuf Mohamed al-Jaida said in his foreword, in a report on Qatar's capital market, jointly prepared by QFC and Refinitiv.
The QFC foresees a continued emphasis on the development of the local capital markets, which would in turn expand opportunities for promising Qatari financial institutions, he said.
The QFC had last year put in place NEBI, a new economic corridor focusing Kuwait, Oman, India, Pakistan and Turkey with a combined economy of more than $2.1tn. It is also a strategy that focuses on specific markets and sectors that have great potential for future growth
The joint report, which was launched on Wednesday at a webinar, found that Qatar has an opportunity to open its capital markets to foreign issuers through regulatory partnerships to facilitate cross-border distribution of funds and equity and bond listings.
This includes mutual recognition frameworks for cross-border offerings, listings, and professionals; the formation of exchange alliances; and the development of a conducive regulatory framework and infrastructure to facilitate cross-border transactions among international capital markets.
Similarly, fund passporting would allow the marketing and distribution of foreign investment funds and vice versa. However, the implementation of a regional passporting regime has so far proven successful mainly in the European economic area.
"This warrants carefully selecting markets governed by similar regulatory frameworks and governance structures as Qatar’s partners in any fund passporting agreements," the report said.
To support cross-listing and fund passporting arrangements, Qatar should also consider establishing a partnership between the QCSD and international clearing and settlement houses such as Euroclear, which is the largest in Europe.
The QCSD is a service providing company, licensed by Qatar Financial Market Authority (QFMA) engaging in providing safekeeping, clearing and settlement of securities and other financial instruments listed on the QSE.
The QCSD aims to create a cost effective post trade financial infrastructure wherein all types of customers can hold financial assets such as treasury bills, bonds and sukuks in a safe and secured environment.
Using such partnerships to help adopt international central securities depository settlement models would "significantly" reduce operational inefficiencies and liquidity fragmentations that arise from listing securities and funds across multiple jurisdictions, the report said.
The use of a single clearing and settlements model would streamline these processes as if conducted in one central location, it added.