By Kaya Johnson, Contributor
The Hong Kong Monetary Authority (HKMA) and the Financial Services Regulatory Authority (FSRA) of ADGM recently came together to sign a cooperative agreement that will boost the innovation of financial services in the UAE and Hong Kong. The agreement is meant to promote financial technology (fintech) and accelerate the expansion of innovative businesses in both markets. This will encompass activities such as information sharing, exploration of mutually beneficial projects, and referral of creative and advanced business undertakings and activities to both markets.
Just as their name indicates, the Abu Dhabi Global Market (ADGM) is a financial institution that operates internationally. Their office is located in Abu Dhabi, which happens to be the capital of the United Arab Emirates.
With the new deal, it can be said that the ADGM is now partnering with 11 top financial regulators to boost innovation and promote the growth of financial technology across the globe.
The agreement was signed in Hong Kong on the 26th of June between HKMA and the FSRA of ADGM. Representing the de facto central bank of the city was the Chief fintech officer, Mr. Nelson Chow while the financial regulator of ADGM was represented by their CEO, Mr Richard Teng.
According to Mr. Chow, the agreement will not only lead to a closer relationship between both authorities, it will also reinforce their respective roles and initiative in fintech. And much of this is possible because HKMA's ambitions seems to be in line with ADGM's strong resolve in the pursuit of innovation. Thus the Chief Fintech officer believes the collaboration between both markets will facilitate the emergence of a cross-border trade network, which will require the use of distributed ledger technology (DLT).
The Chief Executive Officer of FSRA, Mr. Teng, also expressed his delight over the agreement which is expected to further strengthen the long term economic partnership between Hong Kong and Abu Dhabi. The deal consolidates ADGM's efforts in supporting the financial growth and development of Abu Dhabi and the United Arab Emirates. Their commitment also extends to the Middle East, as well as other regions like Africa and a greater part of Asia. According to the boss, ADGM will work hand in hand with the HKMA to provide the needed support for innovative companies and new businesses in fintech to thrive. The initiative will mainly involve adopting and applying business solutions that will advance the financial markets in Abu Dhabi as well as their jurisdiction.
The use of DLT ensures administrative functionality and data storage is not centralized. Thus details of transactions are logged online in multiple locations at the same time. This is quite different from how traditional databases operate.
This is obviously not the first time a financial regulator in Hong Kong is signing such an agreement with a foreign nation. Just last year, a similar agreement was signed by the Hong Kong Securities and Future Commission with Securities Commission Malaysia to instigate development and encourage greater information sharing in the digital finance industry. The deal was inked by both parties in September.
ADGM has been acclaimed as the fintech hub in the Middle East and North Africa (MENA) region, which is why they value partnership with international financial markets and jurisdictions. The aim is to resolve bridges and foster the development and expansion of the fintech ecosystem across the globe.
With these collaborations, it is expected that ADGM will be able to maintain a fintech market that is both inclusive and global with continuous provisions for the communities in the region.