Bahr Karim

Lanae Holbrook, general counsel at Nasdaq Dubai, talks to Kathryn Young about the ups and downs on the DIFC-based international stock exchange.

Nasdaq Dubai is poised for the rebound in the Gulf’s financial markets and has the relevant procedures in place to cope with the anticipated surge in demand for new capital. “We are ready,” says Lanae Holbrook, senior vice-president, general counsel and head of market regulation at the DIFC-based international stock exchange. “People are starting to talk about the markets coming back over here and possibly raising capital again. We have taken time to improve our procedures for new listings and are prepared.”

Although Holbrook will not be drawn on when this might occur exactly, she believes that there are indications that a recovery is on the horizon. “The markets are rebounding in the US. Nasdaq OMX recently announced that it listed 12 IPOs in the third quarter, which is way above what it did last year as the markets were crashing in October 2008. This is a sign that the markets are coming back.”

Judgment call
Holbrook should know. Prior to joining Nasdaq Dubai in March of this year, she headed up a group in the regulatory division of the Washington office of Nasdaq OMX, overseeing companies that fall out of compliance with listings’ rules, a role that she held from 2004. Her interest in securities was fostered initially during her time working as a private practice lawyer for US law firm Fried, Frank, Harris, Shriver & Jacobson.

Holbrook’s background stands her in good stead for her role at Nasdaq Dubai. “Having worked as a lawyer and at Nasdaq OMX, I can identify when there is a need to step up regulation, or when you need to back off a bit. Legal structures and regulatory structures all have common goals,” Holbrook explains.

“You need to have rules in place, which need to be enforced, and a legal structure whereby you can’t operate without rules. I brought with me to Nasdaq Dubai knowledge of the rules.”

Holbrook cites as her biggest asset in her current role the experience and judgment that she has acquired and developed over time: “An awareness of what’s expected, what true transparency is, and what investors expect and brokers expect,” she says. Such judgment is invaluable as Holbrook adjusts to the different legal system of the DIFC, which she describes as being more ideological to that of the US. “In the US you have had securities laws in place since 1934, so people are accustomed to disclosure and accustomed to the rules; they pretty much know which page to turn to find the relevant ruling. Here, the rules are more principles-based,” she explains.

Holbrook uses as an example a rule at Nasdaq Dubai that requires listed companies to adhere to the “continuous disclosure” principle, whereby all companies on the exchange must continually disclose whenever they are in possession of material or price-sensitive information that might change the price of their stock or their debt instrument. In the US, this requirement is covered by Form 8K, which tells companies exactly what has to be disclosed and that they have four business days in which to do it. “It’s a little more of a bright line,” Holbrook says.

Investors in companies on Nasdaq Dubai want to know the same sorts of information as international investors elsewhere, although it is rather the change in regime that takes some getting used to. Holbrook also points to the increase in face-to-face contact with members of listed companies as being another difference between working practices in the US and in Dubai. Whereas most of the contact in Washington was conducted over the telephone and via email, Holbrook and her team now meet with at least one or two companies a week.

This is a positive, believes Holbrook, as it enables a deeper understanding of the operations of the relevant businesses and provides the perfect forum for the regulatory and legal team to clarify issues with company executives. “Without even making changes per se in the regulatory structure, we can educate people on what rules are in place and be more transparent on how we are enforcing those rules. There is already a strong corporate governance rules’ structure, we just wanted company disclosure to be a bit clearer. Companies needed a bit more information on the disclosure process and how to do it,” she reveals.

Surveying the scene
Holbrook oversees a team of around eight within the legal and regulatory group, which comprises four distinct functions: market surveillance; listing authority; member compliance; and general legal work. While the latter involves the more customary in-house legal functions, such as the drawing up of contracts and employments agreements, the first three are more specialist and specific. Member compliance involves liaison with the listed companies to ensure each has in place procedures such as anti-money laundering controls and checks to ensure company traders are following the business rules.

The listing authority function also requires close contact with the listed companies. Those fulfilling the function talk every day to the relevant businesses and get to know in detail how the company works, so when an announcement is made, its likely impact on the business – and on the market – is more easily understood.

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