The impending introduction in Jersey of Unregulated Funds, following the introduction of the Experts Funds, Listed Funds and Non-Domiciled Funds regimes over the past three years, is a reflection of the island's growing maturity as a funds jurisdiction. Jersey has always prided itself on being one of the more highly regulated centres for funds, but the unregulated regime signifies the realisation that there are categories of funds that do not require regulation.

Whether Jersey should introduce an unregulated fund regime has been a topic of discussion between industry representatives and the Jersey Financial Services Commission for some time. It was a route that Guernsey opted not to go down when implementing the Harwood Report on fund regulation delivered last year, but Jersey has decided on this bold move because highly sophisticated institutional investors often do not need or desire the regulatory protection and attendant constraints attached to Expert Funds.

This is the next logical extension of the island's strategy to focus on niche, sophisticated products for high net worth and institutional investors, as opposed to retail funds, which has characterised the development of the industry since the introduction of the Expert Funds regime in 2004.

It will also help the island to build the service capabilities and human skills required to make it a competitive long-term player in the alternative funds industry. When the Expert Funds regime was introduced, there was already a core of administrators on the island capable of dealing with alternative funds, but a process of organic development is underway which is enabling Jersey providers to offer high added-value services, in the same way that the authorities are seeking - with growing success - to attract hedge fund managers to the island by emphasising its lifestyle qualities, advantageous tax system and high-quality professional and technological infrastructure.

These efforts are vital because the competition is tough, not just from traditional rival Guernsey but fund industry hubs around the world. In seeking to attract alternative managers to domicile their funds in Jersey, the island is up against the Cayman Islands, which has had a type of unregulated registered funds regime in place for years, making it the world's leading hedge fund domicile. In the same way, Dublin has established itself as one of the foremost centres for hedge fund administration.

In launching a category of unregulated funds that do not require the involvement of a Jersey-regulated managing functionary, we are setting out our stall especially to European managers. In particular Jersey is focusing on low-footprint but high worth services that suit its restricted size and population constraints - hence the strategy to concentrate on niche products geared to the requirements of high net worth clients rather than a mass market.

Today the island offers three main types of fund vehicle: corporate, limited partnerships, which cover the private equity side, and unit trusts, which include property funds. The new regulatory structure allows Jersey to compete more aggressively for funds because they are now regulated - or not - according to their level of risk and the type of investors they serve rather than according to rigid restrictions more suited to protection of a retail customer base.

Jersey will probably never be a Cayman, attracting hundreds of new funds every year, but it is capable of competing effectively for business from European managers for whom the island's skill set, economic and political stability, high reputation and convenient time zone make it an attractive alternative.

Mark Chambers is a corporate partner with Ozannes in Jersey


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