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The Independent Financial Centre of the Americas (IFCA) the world’s first privately operated and independently regulated international financial centre. It was officially established on March 10, 2006 and is being built and operated in the city of Guayacanes in the Dominican Republic. If all goes well the centre could be up and running by 2009 and would serve as the capital markets hub for the Americas, similar to The Dubai International Financial Center in the Middle East. It is considered one of the most ambitious projects undertaken in the regions recent history and could potentially transform the financial condition of Latin America and its position in the Global economy.
- 1 Background
- 2 Banking
- 3 LAIFEX
- 4 Regulation
- 5 The Dominican Republic
- 6 See also
- 7 Notes
- 8 External links
The Centre is the result of three years research by a group of Dominican and Latin American investors into other financial centres and extracts the best practices from around the world. It benefits from beginning with a clean slate - a new legal framework and an independent regulatory structure will be served by state-of-the-art information architecture. It will operate from a USD S850 million purpose-built business facility on a 17 square kilometer greenfield site, bordering the Caribbean coast. The site is midway between Santo Domingo and the Casa De Campo resort and will include office space, a conference centre, independent power generators and a private landing strip. The IFCA will house private and commercial banks and an electronic exchange, called LAIFEX, to clear and settle emerging market debt and other tradable products.
Swiss-Dominican entrepreneur Gaetan Bucher, the current President of the IFCA commented:“The Independent Financial Centre of the Americas is being purpose built from the ground up: the legislation, regulation, operating systems and physical infrastructure have been meticulously planned and researched. We are applying the best practice of other financial centres, to create a new model for the 21st century, which responds positively to greater regulatory scrutiny and appeals to market participants operating in an increasingly innovative marketplace. The Government of the Dominican Republic appreciates the benefits our model will generate for the country. It also understands that success is dependent on the dynamism and adaptability of a private enterprise".
The Centre plans to support a wide range of banking services. The Regulatory Authority will grant licenses for other regulated financial services business including investment, commercial and private banking as well as asset management. The Information technology (IT) platform has been designed to underpin all banking transactions to increase the speed and cost efficiency for institutions and their clients.
The Centre will house a settlement and clearing centre, called LAIFEX: the Latin American International Financial Exchange. LAIFEX will facilitate primary and secondary debt trading both regionally and globally. It is a private exchange where members can apply for seats. The custom-built IT platform for the Centre could also support a regional stock exchange. The rationale behind the Clearing (finance) and settlement centre is the USD 2.94 trillion of Latin American and Caribbean debt traded globally in 2004, accounting for 63.2 % of total emerging markets debt traded worldwide that year. Currently, there is no central platform to clear and settle locally denominated trades in Latin American debt. While competition for clearing and settlement comes from the over-the-counter market between banks, a private banking centre would compete with neighbouring Caribbean centres such as the Bahamas and the Cayman Islands that have built up strength in this area over the past 25 years. However, Mr. Bucher aims to steal a march on rivals by capitalising on recent international concern about regulation of offshore financial centres. (See also; Latin American debt crisis)
The Centre will embrace positive regulation through independence, responsiveness, efficiency and transparency. An internationally recognised regulatory authority is presently being established to regulate the Centre with complete independence from political and commercial influences, and the Centre itself. A new legal framework is currently being proposed to the Congress of the Dominican Republic to grant an enabling law which will permit the formation of a new jurisdiction in 2006. The centre’s regulatory framework is being tailored directly to guidelines laid down recently by the Financial Action Task Force, an intergovernmental body formed to combat money laundering. The centre’s regulatory arrangements – outline proposals for which are being drawn up by Patton Boggs, a Washington law firm, and Deloitte Consulting in London – would be separate from those that already apply to the Domincan Republic’s domestic financial system. According to Mr. Bucher, “Instead of an auditor coming in once a year you’ll have constant live and real-time monitoring of transactions."
The Dominican Republic
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Sources: Data from an April 2005 report by the IMF and graphics data are from data by the World Bank from 2003 . GDP (PPP) per capita for Latin America was calculated using population data from List of countries by population
For a country that has just survived the biggest banking crisis in recent Latin American history, it might seem a bit ambitious to launch an offshore financial centre. But that is exactly what is planned for the Dominican Republic. The country was selected for the IFCA due to its strong economic and cultural links with Latin America, the United States and Europe, and its political stability, economic resurgence and well-developed infrastructure. Following the 2003 banking crisis (Banco Intercontinental) and change of government, President Leonel Fernandez is credited by his peers with rebuilding the economy and fostering strong international relations, providing a solid backdrop for the Independent Financial Centre of the Americas. Former Dominican president Hipólito Mejía of the Dominican Revolutionary Party, who still has big influence among opposition deputies, is also a firm supporter of the project.