Efforts between China and the UAE to enhance each other’s supervisory clout in the securities market will lead to improved conditions for investors: that is the aim of a new Memorandum of Understanding (MoU).
Signed in Beijing on 14 July by officials from the China Securities Regulatory Commission (CSRC) and Abu Dhabi’s Financial Services Regulatory Authority (FSRA), the MoU sets out ambitious plans for work sharing that will enable each organisation to get better at monitoring – and tackling – market inconsistencies.
Under the arrangement, the parties will provide each other with know-how, technical training and other information that will promote and uphold high standards in the securities trade within, and between, the UAE and China, safeguarding end users’ interests.
The MoU follows the FSRA’s recent, similar pact with the China Banking Regulatory Commission (CBRC) – strengthening the commitment of FSRA parent group Abu Dhabi Global Market (ADGM) to help China fulfil the objectives of its wide-ranging One Belt, One Road initiative.
Located primarily in the Asia-Pacific, the One Belt, One Road scheme consists of numerous, multilateral public-works projects designed to unleash a wave of modernisation through the participating countries’ infrastructures.
Through agreements with some of those countries – as well as key, international funding bodies that are supporting the plans – India and key territories in the Middle East have also joined the initiative.
Following the FSRA’s recent announcement that it is aiming to transform Abu Dhabi into a fertile location for fintech start-ups, the MoUs with leading Chinese regulators provide further evidence of the emirate’s aspirations to become a world-leading financial hub.
Announcing the latest partnership, FSRA CEO Richard Teng said: “We are very pleased to cooperate with the CSRC and believe the concerted efforts from both authorities will serve the long-term interests of our respective stakeholders and markets.
“The growing economies of both China and the UAE have offered, and will continue to offer, investment opportunities for investors worldwide.”
Teng added: “As an international financial centre based in the heart of the Middle East, ADGM is committed to provide a well-regulated and strategic platform for companies and investors to access the UAE’s growth and advance their business aspirations in this region.
“With the MoU, we will strengthen regulatory cooperation between both markets to support increasing cross-border activities.”
As if to demonstrate its bite in the securities market, just two days after the MoU was signed, the CSRC downgraded the regulatory ratings of several, domestic firms.
China’s biggest trader in the market, CITIC Securities, was downgraded from AA to BBB for the first time in eight years, while Guosen Securities, Huatai Securities and Haitong Securities were lowered to the same level.
CSRC spokesman Deng Ge told China Daily that the downgrades reflected the findings of an annual market review, explaining: “The regulator will use the rating results to adopt a targeted and differentiated regulatory approach on different firms.”