QATAR PARTNERS WITH NYSE EURONEXT TO REBRAND SECURITIES

UNCLAS SECTION 01 OF 02 DOHA 000415

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN EINV QA
SUBJECT: QATAR PARTNERS WITH NYSE EURONEXT TO REBRAND SECURITIES
MARKET

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(SBU) KEY POINTS
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-- Rebranding its bourse as "Qatar Exchange" (formerly the Doha
Securities Market),the Qatar Investment Authority (QIA) and NYSE
Euronext announced June 19 a formal agreement to give the latter a
20 percent stake in the exchange (for $200 million) in exchange for
services and technology assistance, and a leading management role.

-- The agreement will not change existing market practices or
regulation in the short-term, although it envisions a future
exchange that can accommodate more diverse products and will invite
more international investment.

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(SBU) COMMENTS
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-- The launch of Qatar Exchange is Qatar's latest success in luring
internationally-recognized firms to provide technology and knowledge
transfer, in exchange for a piece of the fast-growing Qatari
economy.

-- Modernization of the Qatar Exchange's processes could help it
become more competitive and efficient, giving it an advantage in
competition with other Gulf markets.

-- A small coterie of Qatari officials managed the formation of this
venture. The model is similar to the Qatar Financial Center, where
the GOQ parachutes in an internationally-recognized system to
quickly upgrade Qatar's image and capabilities, vice pushing for
incremental reforms of the private sector.

-- Qatar Exchange remains a relatively small operation - with only
43 listed companies and market capitalization of about USD 75
billion. While not a bellwether of Qatar's overall economic health,
many Qataris are invested in the exchange and so its fluctuations
have a significant influence on personal financial health.

End Key Points and Comments.


1. (U) Announcing the agreement in soaring language, Qatari Prime
Minister Hamad Bin Jassim Al Thani (who is also the QIA CEO) said
that the new bourse "paves the way for Qatar to take a prominent
role in the world's capital markets for the benefit of both the
people of Qatar and the Middle East more generally. Our vision is
to create a world class financial center around a global exchange
that is on par with the deepest pools of capital across Europe, the
U.S. and Asia."


2. (U) The most immediate consequence of the venture is that NYSE
Euronext will provide Qatar Exchange with its latest generation of
trading technology (Universal Trading Platform). NYSE Euronext also
committed to use Doha as its Middle East operational and support
hub, a coup for Qatar in its competition with other regional
financial centers. Qatar Exchange will also reportedly seek
listings in New York and Paris.


3. (SBU) The agreement also envisions Qatar Exchange as a platform
for developing more diverse products. For example, Qatari officials
have expressed interest in developing an energy derivative.

-- The QIA also owns the "International Mercantile Exchange" (IMEX),
a QFC-registered firm with offices in London and Doha whose goal is
to create regional trading hubs and a commodity exchange for
hydrocarbons and related products.


4. (SBU) Qatar Exchange will continue to be regulated by the Qatar
Financial Markets Authority (QFMA).

-- The QFC Regulatory Authority Managing Director for Financial
Sector Development and Policy told Econoff Fabrycky June 23 that the
QFC was not directly involved in the launch of Qatar Exchange,
though it did consult with the partners as they came to agreement.
If Qatar continues to move toward a single, unified regulator (a
process delayed indefinitely by the economic crisis and pushback
from parts of the Qatari government),than QFC regulators will
eventually assume a prominent role in shaping the regulatory
environment for the exchange.


5. (U) NYSE Euronext will take a 20 percent stake in the market for
USD 200 million. QIA will retain 80 percent of the market through
its subsidiary Qatar Holding (Note: Qatar Holding is registered in
the Qatar Financial Center and is the strategic and direct
investment arm of the QIA.)

-- The exchange's new board will be headed by Dr. Khalid Al-Attiyah,
the Minister of State for International Cooperation who was recently

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also appointed Acting Minister of Business and Trade. (Note: While
an able public servant and trusted by the Amir and other senior GOQ
officials, Al-Attiyah will have a full plate balancing his new
business responsibilities with his traditional role in the Foreign
Ministry).

-- Qatar Holding's Managing Director Ahmed Al-Sayyed will serve as
the Board's Vice Chairman.

-- Andrew Went, a former Managing Director for NYSE Euronext's
Amsterdam operations, was appointed as CEO of the exchange.

-- NYSE Euronext will take three of 11 seats on the board, while QIA
will appoint six, and two will be independent.'


6. (SBU) The former DSM General Manager Saif Khalif Al-Mansoori
previewed the deal for Econoff Fabrycky in early June, noting that
the DSM had been working with NYSE for years and all of the current
staff would be retained - as a result, he expected a quick
transition.

LEBARON