Qatar is enjoying a period of outstanding economic prosperity. It is benefiting from politicalstability, rapidly rising living standards, and significant infrastructure investment. At the sametime, the country continues to implement important initiatives that will secure its continued growth and its role in the international community.
Through both the Qatar National Vision 2030 and the Qatar National Development Strategy 2011-2016, Qatar has identified ambitious objectives in support of the four pillars of the National Vision – human development, social development, economic development and environmental development.
The global regulatory framework has undergone significant changes in recent years. The global financial crisis prompted major amendments in the international standards established by the international financial standard setters: the Basel Committee on Banking Supervision (BCBS), the International Association of Insurance Supervisors (IAIS) and the International Organization of Securities Commissions (IOSCO).
The reforms have been aimed at strengthening, among other things, standards for capital adequacy, liquidity management and governance. Key emphasis has been placed on developing a risk-based approach to regulating financial institutions, financial markets and financial infrastructure. Regulatory authorities have also given increased emphasis to regulatory cooperation and information-sharing; and sought to identify systemically important financial institutions and develop orderly resolution mechanisms.
In order for Qatar to build sustained economic prosperity, it is important to build a competitive and diversified economy that is less dependent on the hydrocarbon sector. To achieve this objective, Qatar has identified a number of reforms that will be initiated as part of its National Development Strategy 2011-2016. The changes are designed to bring together decisions of national significance within an integrated and coordinated framework.
This includes the objective of rationalising the functions and roles of Government ministries and agencies in a manner that improves accountability, planning and service delivery. The QCB, QFMA and QFCRA are committed to supporting this strategy by implementing a more effective and sound regulatory framework that builds strength and resiliency in the financial sector.
More broadly, a strong financial sector is critical to supporting the Government’s efforts to create jobs and encourage investment in a diversified economy so that the coming generations will be less vulnerable to the boom and bust of energy price cycles. The entrepreneurship and innovation required to achieve this objective should not be underestimated and will necessitate the development of initiatives in a number of areas.
The regulatory system in Qatar has witnessed noticeable development and expansion in the past decade. The QFMA was established in 2005 as an independent regulatory authority for firms that are authorised to conduct financial services activities in or from the State of Qatar and it is empowered to exercise regulatory oversight and enforcement over the capital markets.
The QFC was also established in 2005 to promote investment in the financial sector by international firms and domestic investors. This initiative was accompanied by the development of a regulatory system by the QFCRA that meets international best practice.
The QCB was established in 1993 and inherited the responsibilities of the Qatar Monetary Agency. Since then, it has become the primary regulator of banks and financial institutions inside the State.
The QCB established the Qatar Credit Bureau in 2011 to collect and maintain credit information, and share it with banks and financial institutions in order to assist them in undertaking credit evaluations and credit worthiness assessments.
In a step towards establishing closer cooperation and harmonisation between the regulatory authorities, His Excellency Sheikh Abdulla Bin Saoud Al Thani, the Governor of the QCB, was named as Chairman of the QFCRA Board and the QFMA Board in 2012.
In order to strengthen and enhance the regulatory framework in Qatar, two key laws were repealed and replaced in 2012: QCB Law No. 33 of 2006 and QFMA Law No. 33 of 2005 were repealed and replaced by QCB Law No. (13) of 2012 and QFMA Law No. (8) of 2012, respectively. Following enactment of the new laws, the QCB, QFMA and QFCRA have been working together in a coordinated and mutually supportive manner to harmonise Qatar’s financial sector policies and financial infrastructure in line with international standards and best practice.
The new QCB Law established the QCB as the competent supreme authority, in the context of the Qatar National Vision 2030, with responsibility for the design and implementation of policies relating to the regulation, control and supervision of financial services and financial markets in Qatar. The QCB Law also introduced specific provisions addressing the licensing and supervision of insurance businesses, consumer protection and customer confidentiality, protection of credit information, regulation of Islamic financial institutions, merger and acquisition of financial institutions, settlement of disputes, and sanctions for persons who conduct financial services activities without the required licences.
The new QFMA law gives the QFMA wider responsibilities and obligations to supervise and monitor the capital markets in the State of Qatar. These responsibilities and obligations are based on four pillars:
- protection of investors
- fair and efficient financial markets,
- transparency, professionalism and efficiency as well as awareness and markets integrity, and
- prohibitions on misleading information and deceptive conduct affecting financial products and services
The QCB Law gives an expanded focus to the macro-prudential framework in Qatar by establishing the Financial Stability and Risk Control Committee (FSRCC). The FSRCC is chaired by H.E. the Governor of the QCB and its membership includes H.E. the Deputy Governor (Vice-Chairman) and the Chief Executive Officers of the QFMA and the QFCRA.
In line with Article 116 of the QCB Law, the FSRCC is responsible for: (i) identifying and assessing risks to the financial sector and markets and recommending solutions to manage and mitigate such risks; (ii) coordinating the work of the financial regulatory authorities in the State; and (iii) proposing policies related to regulation, control and supervision of financial services businesses and markets.
The work of the FSRCC will serve to strengthen financial stability and minimise overlap between the regulatory authorities. This will involve the regulatory authorities aligning policies and procedures in a manner that is consistent with their legislative mandates and international best practice, as well as addressing regulatory gaps in financial sector regulation.
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Guided by Qatar’s National Vision 2030 and the clear objectives for financial regulation set out in their legislative frameworks, the QCB, QFMA and QFCRA have developed a common vision for enhancing financial sector regulation in Qatar. They have identified a number of key goals that are critical to building greater resiliency and efficiency in Qatar’s financial institutions and financial markets. Over the coming years, the organisations will develop a work plan and devote resources to achieve these objectives.
The core objectives and action points are set out in in the Appendix.