Benefits of Cayman Islands Hedge Funds

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While there’s little doubt that the Cayman Islands’ funds business has had a knock recently, as has the market typically, it is still phenomenally strong. The latest data from the Cayman Islands Monetary Authority (CIMA) show registered fund numbers hovering around 9500, a fall of just five % below the all time water mark that is high of 10,000 registered funds in mid 2008. This is not a significant reduction in numbers, since the substantial economic turmoil of the previous 2 years. Indeed, fund numbers have went on to increase monthly in 2010, with several predicting they are going to be back up more than 10,000 by the conclusion of the season. Additionally, there are thousands of private equity funds started in the Cayman Islands.

While a couple of European based managers & investors are taking measures to advance their money closer to house, we’re not seeing the threatened drift away from the Cayman Islands to destinations as Dublin and Luxembourg. Accordingly, despite attacks on offshore centres, the appeal of the Cayman Islands remains powerful, in large part because establishing in the Cayman Islands is very basic, with minimum white tape, service providers with an insightful expertise and information, along with 0 tax.

This short article considers Cayman’s strengths, as well as exactly why it is going to continue to guide how in the money business, and also risks the jurisdiction currently faces.

Main STRENGTHS
Sensible legal framework A lot of the Cayman Islands’ success in attracting money is mainly because that the Mutual Funds Law doesn’t impose restrictions on a fund’s investment strategy or even require extensive due diligence on fund promoters and directors. The important regulatory goal under this Law would be to compel adequate disclosure by fund operators therefore investors are completely conscious of what they’re investing in. Cayman keeps a powerful edge over several other jurisdictions due to this particular workable and sensible strategy to fund regulation and its more developed legal process, primarily based on English common law.

Centre of excellence The Cayman Islands has became a prominent financial services centre by getting an open, free market, tax neutral economic climate that caters to a worldwide customer base, maintained by extremely competent, advanced professionals. It’s a centre of excellence for hedge fund development thanks to a big infrastructure of expert legal, audit, accounting, administration and fiduciary expertise. With the brand new focus by investors on improved transparency, third party service providers and thorough due diligence on fund documents, custody and administration plans, which identified infrastructure as well as the money of hedge fund expertise here would make picking Cayman a simple choice.

Proven model There hasn’t been the remarkable number of fund related litigation and fund closures some predicted at the conclusion of 2008. With the correct equipment and guidance, many supervisors of Cayman based funds are already ready to restructure and work the way of theirs from problems. This is in large part because of the quality of other and legal services funds have usually received in Cayman. Further, Cayman Islands’ legal advisors and money (not to point out investors) have learned in the financial crisis and also have overhauled fund documentation to make certain it’s completely flexible, obviously drafted and offers the resources and mechanisms required to contend with prospective future complications. Cayman hedge funds are tried and tried which really works.

Strong regulation All registered funds are governed by the Cayman Islands anti money laundering and overseas co operation regimes. International assessors, like the International Monetary Fund, the OECD as well as the Caribbean Financial Action Task Force, have recognized the quality of Cayman’s regulatory regime along with its increased compliance culture.

Capacity to adjust In days gone by, the Cayman Islands indicates its ability and resilience to adapt in the face of challenge, by answering the shifting product demands of customers, by meeting or even exceeding related international requirements and also by engaging in positive dialogue with overseas regulatory bodies.

Despite agreement in many quarters that offshore financial centres weren’t the root cause of the worldwide financial crisis, Cayman will continue to come under attack in certain quarters as being a “tax haven” and also a “secrecy jurisdiction”, which it most assuredly is not. The significance of a tax neutral platform is frequently misunderstood. Accordingly, Cayman is confronted with a different time of adaptation and challenge and is working really hard to fulfill the challenge – through continuing to perfect and upgrade its business legislation, making sure it attracts excellent experts to male the financial services business right here, entering into additional tax sharing arrangements with nations around the world and continuing to offer exceptional solutions on the worldwide hedge funds industry.