Supporting investment excellence and market integrity in MENA

Supporting investment excellence and market integrity in MENA

William Tohmé, CFA, regional head of the Middle East and North Africa at CFA Institute, explains how the institute’s educational programmes, partnerships, and local presence are helping to advance skills and knowledge sharing in the region’s investment management industry.

In 2018, CFA Institute opened an office in Abu Dhabi in collaboration with the Abu Dhabi Global Market (ADGM). Why did CFA Institute decide to establish a local presence in the Middle East?

The opening of our office in Abu Dhabi is an exciting milestone for CFA Institute and signifies commitment to the Middle East and North Africa (MENA). Establishing a permanent presence and serving the wider MENA region will enable us to support our candidates and members in local markets, and to honour our commitment to open up access in newer markets where there is demand for our portfolio of educational programmes. Through these, we hope to build on the work we are already doing with financial authorities, regulators, and employers to build a world-class investment profession.

Our collaboration with Abu Dhabi Global Market underscores the mutual commitment of both organisations to contribute to a growing international centre of excellence for knowledge in the Middle East; we intend to work together to explore new initiatives which strengthen the capabilities, proficiency and experience of financial professionals, including but not limited to the development of educational initiatives around the Global Investment Performance Standards (GIPS) and the Asset Manager Code (AMC); contributing insights into relevant regulatory frameworks to strengthen the financial system; exploring opportunities which could contribute to the ADGM Knowledge Hub Initiative; and a data centre related to financial sector information and intelligence.

How does CFA Institute support best practice among investment management professionals and promote transparency in the MENA region?

We do this primarily through our network of local member societies who work closely with CFA Program candidates, members, and charterholders. Our new office signals strong, lasting support for them, and we plan to intensify our efforts to build market integrity, enhance market transparency, and embed professionalism and excellence in the regional investment management industry in partnering ever more closely with them. The MENA region is important to CFA Institute, with over 5,200 members and a network of nine local member societies in the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait, Lebanon, Doha, Egypt, Jordan, and Oman. In June this year, the greatest number of exam candidates for the CFA Program hailed from the United Arab Emirates (1,693), and candidate growth in Saudi Arabia was the highest across the MENA region, with 563 candidates, representing a 27% increase.

How do you see the work of CFA Institute in the Middle East contributing to the development of the local financial markets and their ability to attract foreign investment?

In this region, we try and do that in two distinct ways. First of all, it’s developing human capital. We’re providing a robust educational base in investment management skills, underpinned by ethical frameworks, for the bright, new individuals coming into the market. Secondly, and key, is that we’re trying to develop market integrity, so that the market place in which individuals operate if they bring that sound judgement to bear, can benefit society in the way that we want it to happen.

CFA Institute recently signed a Memorandum of Understanding with the Middle East Investor Relations Association (MEIRA). What does this collaboration entail and what are its key aims?

The collaboration between the two organisations underscores their mutual commitment to contribute to improve the levels of transparency and disclosure of Middle Eastern companies by facilitating a centre for knowledge exchange in the region. Specifically, the MoU sets out a framework for collaboration between both entities to develop a network of knowledge sharing and best practice initiatives, in order to achieve better corporate governance objectives.

In light of CFA Institute’s work with the Principles for Responsible Investment (PRI) to better understand ESG integration practices globally, can you outline the extent to which investors in the Middle East are focusing on ESG and how you envision this trend evolving in the future?

ESG integration in the Arabian Gulf region is in its early stages. Although several positive developments hint at an increased adoption of ESG integration practices by investors in the region, some challenges remain and will require the concurrence of different stakeholders to allow for a greater penetration of ESG in this market. As in other regions, investors and companies are both still grappling with the concept of ESG integration, and the reporting of meaningful ESG data remains at an embryonic stage. Indeed, although pressing ESG issues have been identified for the entire region — notably water scarcity, climate change, governance reform, labor practices, and employment — the level of ESG uptake on the part of investors and regulators alike differs.

What are some of the main issues and priorities for your members and MENA-based investment professionals as we head into 2020?

The CFA Program curriculum provides valuable insight into fundamental changes as well as subtler shifts within the investment management industry. We engage in continual dialogue with practitioners and academics to inform considerations for changes within the curriculum, thus it is a useful bellwether of knowledge requirements for the industry. As we head into 2020, we have updated the curriculum to reflect progress in machine learning and Big Data, private wealth management, portfolio management of institutional investors, asset classes (ESG and alternatives to name a few), and ethics (fostering trust, professionalism, codes and standards, regulation). Of these topics, there is perhaps ever-increasing focus on ESG factors and fintech in the industry at large, and rightly so, they are the twin disruptors of our time, particularly among millennials who are tech-savvy, tech driven, and keen to invest with a conscience. We advocate for placing client interests at the heart of investment practice and a more purposeful kind of capitalism, thus our curriculum is also evolving to meet ever-growing ESG requirements. In summary, these changes should be helpful across a spectrum of roles and activities aside from the investment function.

Organisationally, we are increasing our focus and work on lifelong learning which is becoming more important to us and our members, that is, in pursuit of our mission to lead the investment profession globally. In terms of specific benefits for our members, one of our major areas of focus as we head into 2020 is to bring employers and our members together via our career centre, this will deliver huge benefits for our newly minted charterholders and existing members across the region.

 

This Q&A features in the Middle East and North Africa Securities Finance Guide 2019. Download the full guide here.

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