Delivering Regulation in Real-Time: The data centre in the spotlight
Today it is not money, but data that makes the world go around, putting the data centre at the forefront of financial organisations’ efforts to remain commercially competitive, while complying with ever more complex regulatory requirement. The concept of the data centre as a single, physically secure space -full of servers and fans – is fading fast. International customers, stakeholders and regulators are demanding real-time access to services and audit information, regardless of their location or platform of choice. This increased real-time regulation means financial services organisations have to evolve their IT infrastructures and data centres to become proactive, versus reactive, in balancing risk management and mitigation with return on investment, and to ensure they are complaint as new regulation comes into force.

The amount of data businesses will have to manage in future will increase exponentially. The proportion of that data which is governance, risk or compliance (GRC) sensitive will account for more than 30 percent of all data by 2013 (IDL, May 2011).

With regulatory requirements continuing to increase and expand, the proportion of data that will fall under the GRC banner is one reason for this growth. Financial services, in particular, expect the amount of GRC data they collate/manage will become the largest proportion of their data universe. The ongoing challenge of how to meet demands for real-time, on-the-spot audit trails from regulators, while protecting and securing data and meeting privacy and legislative requirements related to money laundering, share dealing and insider trading — to name but a few — will only get more complex.

Manu Bonnassie, Regional Sales Director – Central Europe, Middle East and Africa (CEMA) at Brocade Communications says that meeting and responding to such regulations and legislation places profound strain on an organisation’s IT infrastructure. The data centre is at the heart of this challenge; at a time when the industry is under scrutiny and pressure to reduce operational expenditure, deliver efficiency benefits, and provide better customer services and information sharing systems. However, data centres and business units and their applications and data typically exist in silos, making real-time audit and reporting an expensive, complex and often impossible challenge – where reports are often out of date by the time they are generated, or do not contain the necessary data to facilitate decision making and effective risk management.

With data forming the life-blood of most if not all financial systems today, the data centre is no longer under the remit of the IT department alone. Business divisions need to know that the data centre can enable and deliver on their GRC data policies to ensure they meet and manage regulatory requirement effectively. At the same time, a long list of key roles – both external and internal – are having greater say on what the data centre must be able to deliver. For example, External Auditor, General Counsel, Chief Risk Officer, Compliance Officer, Head of Internal Audit, and the COO are all demanding that the data centre evolves to proactively manage GRC data, rather than be forced to react to GRC data requests on an ad-hoc basis; a risky, time-consuming, costly and distracting approach to a mission-critical, yet operational, function. However, how does one architect a data centre network that can meet all these objectives?

Regulators look to the Data Centre for Real-Time Delivery
With consumer and shareholder confidence remaining shaky, the regulatory framework continues to expand and is likely to demand ever more detailed and complex process and reporting requirements. Subsequently, the need to deliver real-time audits of GRC data or self-regulation without incurring massive cost implications, increases.

This complex situation leaves financial services organisations trying to maintain high-levels of GRC data management effectiveness, while being unable to manage the risks inherent from unverified GRC data from external sources involved in the deal or transaction. This has fuelled demand for more sophisticated business intelligence so that risk and compliance policy owners are better able to draw insight from applications and data sources to support decision making and deliver more robust data governance.

While this may help in the interim, financial services data centres must move into a GRC-ready mode that is flexible, secure, available and scalable to avoid future non-compliance, costly processing errors, increased risk, even more costly manual auditing operations, and to continue to cope effectively with the increasing volumes in data that are expected. To remain GRC-reactive is not an option.

“Don’t React, Respond”: An Integrated Data Centre for Reporting Requires an Intelligent Network
The successful and sustained management of GRC policy risks can influence financial institution’s share price, customer loyalty, competitive advantage and cashflow; with further potential to influence reputational risk as was clearly demonstrated during the recent financial crisis. Similarly, today a regulator’s onsite assessment will set the risk level for a financial organisation and so determine the frequency of future reviews which are a major drain on management and resources.

Taking the combination of regulatory demands in financial services together it becomes clear that the data centre strategy for maintaining a sustainable cost effective response needs review.

Best practice for GRC policy, as supported by auditors, is increasingly based upon an integrated approach rather than a fragmented or silo based model. Integration and consolidation are key elements within a GRC policy: it has been suggested that data centres addressing individual regulatory demands will spend up to 10 times more on the IT solution than those that take a more integrated approach.

Consequently, data needs to be derived directly and rapidly from the Storage Area Network (SAN), through a highly virtualised Ethernet, Fibre Channel or Fibre Channel over Ethernet (FCoE) environment, and converted dynamically into Key Risk Indicator (KRI) measurements; showing policy decision makers the potential impact and required actions in an appropriately timely manner. And enhanced data mobility, protection, and security are now essential to preserving data governance, data integrity and fulfilling regulatory requirements. Emerging technologies such as Ethernet fabrics can also deliver advantages to next generation data centres; by providing simpler, faster and more powerful networks, Ethernet fabrics help organisations improve productivity while drastically reducing operational expenditure.

Ensuring the data centre network is able to facilitate this evolution, and support a more virtualised platform and approach is critical if financial services organisations are to deliver the real-time audit functions, while maintaining access and uptime, application availability and still balance the cost implications and protect current IT investments.

Today it is not money, but data that makes the world go around; financial institutions need to ensure their networks can support their GRC requirements to be able to engage with the economy of the future – one built on data.

Commenting on this round, Abdul-Majid Qasem, d1g.com Executive Director, said that the first round of investment went as expected and scheduled and d1g.com was able to attract the necessary funding for the next phase. He added that d1g.com has succeeded in attracting a number of big investors who are expected to accelerate dg.com growth and increase its popular base.

Qasem said that the amount raised would help the company improve its products and services to achieve the board of directors’ vision and aspirations. He noted that the next strategic investment round of negotiations with some of the leading capital and private equity firms in the region are still going on, which reflects the site’s investment opportunities and their economic viability.

It should be noted that d1g.com, the leading Internet website, was launched in 2007 to provide through its electronic portal and its regional offices, (Jordan, Egypt, Saudi Arabia and Kuwait), a number of advanced electronic services.

Since its inception, d1g.com succeeded in attracting a community of more than 3 million people per month, generating more than 20 million impressions and excess of 15 million online monthly videos. Thus the site became first unchallenged Arab website for sharing video files.
In addition to returns on financial investment, d1g.com succeeded in attracting a number of talents to enhance its position as a powerful regional portal capable of providing for the needs of its different generations users.

In September 2008, d1g.com succeeded in recruiting Dr. Usama Fayyad, Yahoo!’s Chief Data Officer and Executive Vice President, who became a member of d1g.com board of directors. Dr. Fayyad took on the role of Executive Chairman of d1g.com in early 2009. He will work closely with the d1g.com team and our partners to develop d1g.com to become one of the leading international sites.

“I am very excited about working with and investing in d1g.com. The company’s continued progress in this difficult market, is a witness of the value produced by the company for both users and marketers alike.”

“I am very excited about working and investing in d1g.com. The company’s capacity to attract investments in this difficult market, is a witness of the value produced by the company for both users and marketers alike.”

d1g.com was again able to attract Karim Kawar to become an Active Advisor on Board of Directors. Karim Kawar, had previously served as Jordan’s Ambassador to the United States of America in Washington, DC, and is currently an adviser to a number of regional capital and technology companies. It should be noted that Kawar is a leading businessman in the technology sector and he has contributed to the establishment of a number of successful specialized companies in the region.

“I have given advice to d1g.com since its early days. I’m impressed with the growth rates and the number of audience reached by this company in the region,” said Karim Kawar.

He added that “the company has grown from an idea and became a vital community of more than 3 million people in a record time. This is an indicator of the company’s technical capabilities and the strength of its logistics structure. No doubt that this transformation is impressive by all standards. The region is ready for a new generation of internet portals and social networking and d1g.com was able to meet the many needs of Arab users.”

Since its creation, d1g.com continues to consider several acquisitions as well as continue its organic growth — having grown 100% in number of users during the first half of 2009 alone!

In line with this initiative, the Government of Dubai will shortly introduce a new pricing mechanism for such services, which has been developed on a scientific basis by the Department of Finance to further enhance the competitiveness of the emirate and its attractiveness as an investment destination. This new system, which is unique among non-tax nations globally, will provide fee payers with the modern and diversified payment facilities, including through installment payments.

The Department of Finance, in coordination with all relevant Government departments, has identified opportunities to reduce fees by an average of 20-30 per cent. The specific fee reductions in this regard will be announced shortly.

 His Excellency Abdul Rahman Al Saleh, Director-General of the Department of Finance, said that the service fees that will be reduced under the new fee structure include:

The Director-General of the Department of Finance added that, in line with the decree by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the costs associated with all Government services will be reviewed in terms of fees, prices and specific tariffs. The pricing mechanism for Government services will be applied as the basis for the review process, which will in no case lead to an increase in fees, further supporting His Highness Sheikh Mohammed Bin Rashid Al Maktoum’s vision of enhanced economic competitiveness.

The Director-General of the Department of Finance said:

“His Highness Sheikh Mohammed Bin Rashid Al Maktoum has stressed very clearly that the imposition of any new charges will be limited to one instance, which is the development of new services that have been deemed necessary and beneficial to the community. The pricing of any such service will be updated according to the pricing mechanism adopted.”

Regarding the nature and advantages of the Government services pricing mechanism, developed under the guidance of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the Director-General of the Department of Finance said that this mechanism is a unique achievement by the Government of Dubai, not only across the region but also among all non-tax nations worldwide.

Abdul Rahman Al Saleh added that tax-imposing countries generally determine such service fees based on the actual cost to government. Other countries, including both tax and non-tax states, base such fees on cost estimates.

This can lead to two possible outcomes: first, either such fees are higher than required, leading to additional burdens on individuals and institutions, which can create a negative impact on incomes and economic competitiveness. In the second instance, such fees will be lower than required, leading to additional burdens on the government budget, hindering the process of providing and enhancing government services.

Al Saleh said that the Dubai Government’s new pricing mechanism is unique insofar as it based on the revenue policy of the Government. This policy is based on the principle of fairness in pricing Government services. Accordingly, Government services have been identified as belonging to four categories:

1. Public services that are available for all and from which no one can be excluded from their benefits, such as public security, infrastructure, environmental protection, etc. Worldwide, governments typically finance such services through tax revenues. In Dubai and the United Arab Emirates, these services are financed from other sources, such as oil revenues, profits of Government investments, etc.

2. Regulatory and administrative services that are essential to the regulation and authentification of general social and economic activities, such as issuing permits, licenses and all types of visas, in addition to registration records, birth certificates, ownership titles, etc. All the charges and fees of these administrative services are based on the fair cost and benefit to the individual.

The concept of fair cost is a unique advantage in the pricing mechanism that has been developed by the Dubai Government. It requires calculating the cost to be paid by the individual, even if it less than the actual cost to the Government for the same service. This means that the fair cost may be less than the actual cost by up to 30 per cent.

The benefits in this instance have been defined as limited to the private benefits obtained by the applicant upon receipt of the license, permit or registration, without considering the significant additional benefits that result from the use of the license, permit or registration.

3. Competitive economic services: services provided by the Government and the private sector, including medical, educational and other services. This type of service is priced on the basis of market prices. In this instance, the Government ensures that the price of such competitive services is not higher than market price, as the market price is assumed to be moderate because of competition. Such fees must also not be less than market prices so as not to weaken the private sector. The Government is committed to maintaining market prices, even if the cost of such services is higher than the market price.

4. Non-competitive economic services: services of an economic and investment nature that are not subject to competition from various points of delivery, such as electricity, water, public transportation, sanitation, public car parking, etc. Tariffs for these services are determined on the basis of economic cost in line with global standards.

Al Saleh concluded:

“The pricing mechanism approved by His Highness Sheikh Mohammed Bin Rashid Al Maktoum conforms with his vision to promote competitiveness and is based on modern scientific foundations, rather than speculation. The positive effects of the application of this mechanism will become clear in the coming months following the implementation of the comprehensive review initiated by the Department of Finance.”

The new entity enables external investors to benefit from the collective experience of a fund management team with years of investment performance through the Majid Al Futtaim family office.

“For the first time, professional and institutional investors looking for new investment opportunities in both challenging and favorable climates will be able to capitalize on the expertise of Majid Al Futtaim Asset Management’s team of fund managers, who have been tried and tested by one of the region’s most demanding family business groups,” said Mr. Iyad Malas, the Chief Executive Officer of Majid Al Futtaim Asset Management.

“This new financial management organization builds upon the reputation of one of the region’s preeminent family offices, whose fund managers have delivered a strong relative performance,” he added.

Licensed and regulated by the Dubai Financial Services Authority (DFSA) , rigorously overseen by its board, and adhering to international standards of transparency and governance, Majid Al Futtaim Asset Management is set to offer over time a number of investment services to professional investors as well as institutions.

As part of its remit, Majid Al Futtaim Asset Management’s fund management team will continue to oversee Mr. Majid Al Futtaim’s investments, and is dedicated to achieving long-term asset growth and capital preservation through a consistent and disciplined investment approach.

Majid Al Futtaim Asset Management is the latest addition to the Majid Al Futtaim Group.  The Group was established in 1992 by its Founder and President, Mr. Majid Al Futtaim.  Today, the Group employs more than 16,000 people of more than 60 nationalities in 9 countries across the region — Bahrain, Egypt, Syria, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.  The three other businesses in the Group are Majid Al Futtaim Properties, Majid Al Futtaim Retail and Majid Al Futtaim Ventures.

Starting with the first ‘City Centre’ mall in Deira in 1995, and made famous by Mall of the Emirates and Ski Dubai in 2005, the Majid Al Futtaim Group has established itself as the leading retail and leisure pioneer across the Greater Middle East.