Getting the message across

The  Cayman  Islands  is  one  of  the  leading offshore  jurisdictions  for  hedge  funds,  thanks to  legislation  that  positions  Cayman  very  well and  regulation  that  is  neither  too  onerous nor  too  lax. 

In  addition,  the  business  is bolstered  by  the  support  of  very  well qualified  service  providers  including  some  of the  world's  leading  administrators  as  well  as highly  specialised  lawyers  and  accountants. However, there's plenty of competition from other centres. Cayman can't afford sit back on its laurels and luxuriate in being the top domicile for hedge funds when other jurisdictions such as the British Virgin Islands, Bermuda and the Bahamas are making a determined effort to capture the market.

Cayman  is  already  on  the  map  today  as one  of  the  world's  largest  banking  centres, but  today  hedge  funds  are  spearheading  the islands'  evolution  into  a  more  broadly-based financial  services  jurisdiction.  Funds  are  a substantial  and  growing  business  that  has now  joined  banking  as  one  of  the  twin  pillars of  Cayman's  financial  industry.  It's  important that  this  development  is  not  taken  for granted  and  we  do  everything  in  our  power to  build  on  this  position.

In  the  past,  with  offshore  centres  including Cayman  under  pressure  from  a  series  of initiatives  from  international  bodies  such  as the  Organisation  for  Economic  Co-operation and  Development,  the  Financial  Action  Task Force,  the  Financial  Stability  Forum  and  the International  Monetary  Fund,  the  islands' financial  industry  was  understandably  more concerned  about  meeting  these  challenges than  raising  its  international  profile.

Today,  however,  Cayman  has comprehensively  demonstrated  its commitment  to  the  highest  international standards.  It  has  adopted  the  latest  rules  to prevent  money  laundering  and  terrorist financing,  introduced  retrospective  know-your-customer  due  diligence  on  bank  clients that  many  onshore  jurisdictions  rejected  as too  difficult,  and  adopted  the  European Union's  Savings  Tax  Directive  to  help  the  EU countries  enforce  their  tax  policy.

The Cayman government and the funds industry have agreed to increase the resources available to the Cayman Islands Monetary Authority from regulatory fees to ensure that supervision can draw on the best possible technological and human resources. And law firms are assisting many managers of Cayman funds prepare to be regulated by the US Securities and Exchange Commission.
These  efforts  to  ensure  the  compliance  of the  financial  industry  with  today's  global norms  make  this  the  perfect  opportunity  to blow  Cayman's  trumpet  rather  louder  than  in the  past.  Efforts  are  already  underway  to improve  the  islands'  promotional  capability, and  within  the  past  year  the  government  has hired  a  full-time  employee  dedicated  to  this.

However,  this  effort  is  still  in  its  infancy. The  opportunity  before  Cayman  requires  the different  professions  and  branches  of  the financial  industry  to  come  together  with government to  deliver  a  single  message,  and really  promote  the  territory.  The  various players  all  have the  interests  of  Cayman  at heart,  but  now  is  the  time  to  match  this  with the  same  degree of  organisation  and resources  that  other  jurisdictions,  often  with much  less  to  shout  about, are  putting  into promoting  themselves.

Around  half  of  the  world's  hedge  funds are  registered  in  Cayman,  which  is  home  to 90  per  cent  of  the  new  hedge  funds  being launched  in  the  US  market.  Those  are  great statistics,  but  the  industry  must  strike  while the  iron  is  hot  to  capitalise  on  its  dominant position  with  a  proactive  approach to building  and  maintaining  the  islands' international  image. 

Canover Watson is general manager of Admiral Administration

Further reading
from Hedgeweek
Ticino – a place in paradise Mon 24/11/2014 - 12:01
The best of both worlds in Guernsey Mon 24/11/2014 - 11:49
British Virgin Islands Mon 24/11/2014 - 11:15
AIFMD Annex IV reporting made simple Thu 20/11/2014 - 14:01

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