Cayman watching Jersey hedge fund move
By James Dimond, jdimond@cfp.ky
Tuesday 9th October, 2007 Posted: 16:30 CIT (21:30 GMT)
Financial regulators in the Cayman Islands say they are keeping a close eye on developments in Jersey, where regulators are set to announce a ‘zero regulation regime’ for certain hedge funds.
According to a Wall Street Journal report, requirements placed on Jersey domiciled funds with a minimum of US$1 million will effectively fall to zero in January....
caycompass.com
...“Our regime is strong for a reason. Why else would four in five hedge funds in the world domicile in the Cayman Islands? Clearly, we have advantages that have helped us establish our leadership position.”
Although further details of the move are still to be announced, the move seems to represent a change of course for Jersey, which has traditionally erred toward greater regulation for hedge funds.
According to a Walkers Group press release, eligible funds that choose to set up shop in Jersey will not be subject to regulation or review from Jersey financial regulators for the purposes of the Collective Investment Funds (Jersey) Law.
The regime will apply to both open and closed ended funds, the fund will not require a Jersey based fund administrator or director, there will be no requirement for the fund to have an audit, and funds that do have audits will not required to get local sign off on the audit.
“Imitation is the greatest form of flattery,” said David Egglishaw, director of SPV Services with Walkers Cayman Islands. He said the proposed regime sounded similar to what exists in Cayman, but added he would need to look deeper at the new Jersey regime.
However, an important difference is that Cayman requires audits, he explained.
By taking away auditing requirements, investors are denied an important safety net that gives them confidence, Mr. Egglishaw said.
Robert Kirby, a technical director at Jersey Finance, told the Wall Street Journal the decision to introduce the new regime was based on demand from the hedge–fund and other alternative–investment management community, which wanted an unregulated product....
...As of 30 June, there were 8,300 funds registered in the Cayman Islands, 90 per cent of which could be characterised as hedge funds, the Cayman Islands Monetary Authority recently said....
Jersey aims to challenge Cayman
LONDON, England: Hedge Week, October 5, 2007 – Amid strong competition among jurisdictions across Europe to offer more lightly regulated regimes for alternative funds, Jersey is seeking to set itself apart from the crowd with the launch of a new Unregulated Funds regime that simply requires eligible funds to notify the Jersey Financial Services Commission of their launch, not to seek approval.
Geoff Cook, chief executive of the island’s financial industry promotional body Jersey Finance, believes that the unregulated fund regime will allow Jersey to challenge for some of the business that currently goers to the Cayman Islands, home to at least half of the world’s hedge funds. ‘We can offer an alternative to Cayman that offers the same ease of establishment but that is more convenient for European fund promoters,’ he says.
Unlike Cayman-domiciled mutual funds, there is no requirement for a local audit sign-off. Open-ended Unregulated Eligible Investor Funds are permitted to seek a listing, but only on stock exchanges that allow transfer restrictions. Unregulated Exchange Traded Funds have a free choice of exchanges on which to list. There are no restrictions on the type of investor that may buy shares in these funds, although they will come with a risk warning.
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