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New finance zone offering new possibilities

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Abu Dhabi is showing improvements in regional banking, thanks to the newly opened financial zone that has recently announced to be open for business. The process, however, requires legal obligations, such as draft laws, containing management of funds, information, market operations, and the enforcement of all these rights.

These draft laws are open for public comment for a month and a half, with the plans to accept applications for licenses of new firms by the start of 2016. Abu Dhabi Global Market (ADGM) has taken a charge in this matter, and is supposed to influence the overall process greatly. A large driving factor is Abu Dhabi’s amazing reserves of oil, and ADGM just might be prime players in the financial centers outside the region as well.

This zone will be unique; containing its own regulator, tax incentives and a court system to sustain proper legal systems. International firms are expected to be baited from this lucrative zone, as it has been seen by Hector Sants, who was hired as the advisor after he shifted from being a British investment banker.

On the topic of the regulator, he or she would be in charge of the overall ruling of the system, especially those involved with trades. The ADGM has taken ideas from the European Union rules and has applied them to limit risks and eliminate any problems that may arise from a lack of control. The ADGM will also personally talk to stakeholders when the need arises, mostly to manage sector insolvencies.

This draft will attract fund management businesses and will aid further in limiting harmful factors. This may contribute to getting over funds that do not require audited financial statements, with consents from investors. The ADGM plans to form this attraction by suggesting a minimum free float requirement when it comes to share offers, reducing it to a measly 12%. Comparatively, this amount goes along well with that of Singapore, though not that of the European Union, which utilizes 25% instead.

The zone was announced to contain a variety of banks, trading firms, exchange rate shops, and other commodities that help in sustaining personal and official finance. There would also be funds for brokerages, investments, pensions, and Islamic finances. All in all, the zone could fix a lot of lost connections between Tokyo and London, and other locations as well.


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