Ask the Expert: Richard Elston, Group Head of Institutional at CMC Markets

Richard Elston has worked in the financial services industry for 30 years. He joined CMC in 2015, having worked for several other major firms in the sector. Based in Dubai, he has been instrumental in driving significant growth for CMC‘s institutional division, leading a team in London, Sydney, Dubai, Singapore and Frankfurt and serving a growing global client base that includes brokers, money managers, hedge funds, and banks. Here he shares his insights about compliance, KYC and the regulatory landscape in the Middle East.

1. What are the main drivers of growth in the Middle East, especially concerning new financial technologies like KYC solutions?

The regulators here have a ‘can do’ business attitude in terms of inviting financial institutions to establish a presence in the Middle East. This covers the entire spectrum of financial services from the retail sector through to institutional and wholesale provision of finance.

The global displacement of clients setting up in a new environment here is resulting in tremendous opportunities for FinTech and RegTech firms. Muinmos is ideally placed to meet this demand, providing the advanced onboarding capabilities that firms need, in line with the major regulators in the UK, Europe, and beyond.

As far as I’m aware, there’s no regulatory arbitrage here. It’s the combination of regulatory support and market demand that is making the Middle East an increasingly attractive region for financial institutions looking to expand their global footprint.

The UAE takes an a-political stance – it doesn’t judge or take sides. It tries to do legitimate business which means that this region is pretty much open to the world, with small exception.

2. Please give an overview of the regulatory landscape in the region.

In terms of the regulatory landscape, there are a number of regulators in the region including the DFSA which regulates the Dubai International Financial Centre (DIFC) and the ADGM which is the equivalent body in Abu Dhabi. There’s also the onshore federal regulator SCA, which supervises the Securities and Commodities markets in the UAE, and VARA, the regulatory authority for Virtual Assets (although the DFSA and ADGM also provide licenses to digital asset providers).

The DFSA and ADGM have a stance on retail business that is very much aligned with other tier 1 entities – i.e. – there’s more restrictive leverage and there’s a clear definition of retail and professional market counterparty clients.

3. How have you adapted your offerings for the region?

We had a fairly mature business here before we went live in the UAE, with a lot of business coming out of the GCC region.  We have grown as opposed to adapted, expanding our Spot FX and CFD product range with more investment class-oriented products for this region. This includes cash equities and we’re going to be launching futures and options later in the year. Broadening our asset classes and having wider client types will result in onboarding challenges but we are in a strong position to be able to address these using Muinmos’ onboarding platform, in particular, Muinmos’ client suitability & appropriateness assessment and clearance capabilities. Being able to automatically identify who we can and who we can’t do business with for specific products is extremely useful.

4. Which areas in the Middle East do you see as most promising for technological innovation?

There’s a great appetite for financial technological innovation in the UAE and Qatar.  I was recently in Saudi Arabia and there’s a real buzz there, too. Riyadh has a financial district which has similar aspirations to the financial districts in the UAE. I can see it heading in the same direction as Dubai.

5. Based on market trends, how is CMC adapting its strategies? How does CMC’s use of solutions like those from Muinmos fit into this?

Using Muinmos as our onboarding tool enables us to have a unified approach to onboarding institutional clients globally.  Whilst there are particular nuances for offices in different jurisdictions,  the base line is the same across the entire globe.  In essence, we have an automated onboarding product which can be adapted to the meet the regulatory demands of whichever region we’re operating in, giving a fairly homogenised approach.

With Muinmos, we have a holistic product for onboarding, with a central hub for gathering all the necessary documentation. In addition to the client classification and suitability & appropriateness features, it also incorporates KYC and AML, enabling us to identify Politically Exposed Persons (PEPs) and other client-associated risks.