Jersey unveils new regime for listed alternative funds
Jersey's chief regulator has unveiled plans to introduce a new streamlined approval procedure for closed-ended investment funds that are listed on approved stock exchanges. The new regime, which will be known as the Listed Funds Guide and aims to build on the success of the Expert Funds Guide introduced more than two years ago, is designed to cater to hedge funds, funds of hedge funds, private equity and property funds.
According to David Carse, director general of the Jersey Financial Services Commission, funds that are listed on recognised exchanges in Europe and elsewhere, including the Guernsey-based Channel Islands Stock Exchange, should be approved within 72 hours, in the same way as Expert Funds. Speaking at a seminar in London organised by promotional body Jersey Finance and the Jersey Funds Association, Carse said: 'The new regime will sit alongside the Expert Funds Guide and will fit with all international standards, including IOSCO rules. The drafting process is well advanced, and the Listed Funds Guide should be launched before the end of the year.'
To be eligible to benefit from the new regime, funds must be incorporated as Jersey closed-ended companies and have a majority of independent directors on the board. There will be no investment restrictions on Listed Funds, and nor will there be any selling restrictions attached to them, unlike Expert Funds.
While the administrator of a Listed Fund must be based in Jersey, the investment manager can be based outside as long as it can demonstrate suitable experience and is regulated in its home jurisdiction or is otherwise approved by the commission. 'We believe that a lighter level of regulation is appropriate since investors are protected by the rules of the exchanges on which the funds are listed, especially with regard to disclosure, and the corporate governance rules that apply to the fund, as well as the commission's regulation of the Jersey functionary,' Carse said.
According to the JFSC director general, more than 250 Expert Funds have now been approved in Jersey since the regime was introduced in February 2004, but since Expert Funds are limited to sophisticated investors, they can only be listed on a stock exchange if the latter is willing to tolerate restrictions on the transfer of interests. Talks are already underway between the regulator and industry representatives on extending the fast-track regulatory system to Jersey limited partnerships and unit trusts.
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