Spirit of flexibility keeps listings growing
Last year was one of remarkable growth for the Channel Islands Stock Exchange (CISX), and 2005 looks as though it will maintain that momentum.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
In the first half of this year, the exchange listed some 220 new securities, and the introduction last year of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Jersey's Expert Funds regime appears to have played a significant part in the CISX's vigorous growth.
Today the exchange lists a wide range of hedge funds and funds of hedge funds from leading managers including Man Investments, Thames River Capital, GLG Partners, Collins Stewart, HSBC, Close, Jupiter and Morley. Hedge funds are continuing to drive growth in fund listings, alongside other alternative classes such as property and structured products.
In May, for example, the CISX listed no fewer than 17 new open-ended funds. In the past, we've mostly seen hedge funds structured as closed-ended products, but the trend toward open-ended funds reflects increased interest in funds of hedge funds. There are definite signs that the funds business has been stimulated by the launch of the Expert Funds Guide. While not every new fund that is established is applying to us for listing, there is an evident link between new launches and new listings, and a clear correlation between the introduction of the regime and more hedge fund business coming to us.
An important factor in the growth of this business is the recognition by the authorities in Jersey that the expectation level in terms of services has been ratcheted up considerably. People want quality, but they also want efficiency. They want a jurisdiction that recognises the difference between retail and institutional business, that really speeds things along and is not bogged down in bureaucracy. If we don't meet these high expectations, the business will go elsewhere.
The presence of the exchange adds to the benefits for a hedge fund being established in Jersey. Of course, any stock exchange listing gives a product visibility and the 'kitemark' of quality through the public disclosure of information to investors, which gives a listed security an advantage over an unlisted security in terms of marketing and distribution. At this exchange in particular they also enjoy the benefits of a one-stop shop. The issuer aims to do as much as possible in the same jurisdiction to boost efficiency and to save on costs - not only regulatory costs, but the consolidation of compliance costs in a single jurisdiction rather than being spread out over several.
From the regulatory point of view, Jersey offers a very robust regime, but one tempered with a degree of common sense and pragmatism that you don't often see in other jurisdictions. That's mirrored here at the exchange, where we aim to be as flexible as possible about innovative structures and how they may fit within our requirements.
The CISX listing rules favour a disclosure regime rather than featuring long lists of prohibitions, although obviously products have to comply with the spirit of our rules. But there are no overt restrictions on investment parameters, accounting standards and so forth. Flexibility is what product designers are looking for, and that's what we offer.
Nevertheless, the listing rules and the exchange's operations have won recognition from regulators in countries such as the US and UK, reflecting a combination of flexibility and responsibility that enables the CISX to deliver an extremely professional, high-quality service.
By Tamara Menteshvili
Tamara Menteshvili, Chief
Executive, Channel Islands
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