With nearly 2,000 registered funds and a combined net asset value of around USD179bn, Bermuda is home to a thriving and dynamic offshore funds industry.
With nearly 2,000 registered funds and a combined net asset value of around USD179bn, Bermuda is home to a thriving and dynamic offshore funds industry. For many years, the island has been the leader in creating and implementing the business and regulatory models that have become the standard for other jurisdictions to follow. Bermuda is located within two hours’ flying time of most US east coast hubs and a short journey from Canada. Daily air services to the UK and European centres put the island at a crossroad between Europe and North America and in a complimentary time zone to Asia. This proximity to the world’s largest capital markets has been critical to the continued success of the sophisticated industries that Bermuda has developed, nurtured and grown.
The arrival of leading financial services groups such as Citi, its recent acquisition Bisys and Bank of New York, and the acquisition of Bank of Bermuda by HSBC, have thrust the jurisdiction into the spotlight for financial services. These leading global players have given the island’s hedge fund servicing capabilities in particular a significant boost.
Bermuda’s pragmatic approach in creating an operational, technical and regulatory infrastructure focused on clients’ needs, while maintaining integrity throughout the system, stems from concerted collaboration between the private and public sectors. This model ensures that policies remain in line with or ahead of market developments.
A recent example is ‘Launch ‘n’ List’, a collaborative initiative involving the Bermuda International Business Association and the regulator, the Bermuda Monetary Authority, to speed the listing of funds on the Bermuda Stock Exchange (BSX), the world’s leading fully electronic offshore securities market with a current market capitalisation (excluding mutual funds) of more than USD330bn.
‘Launch ‘n’ List’ offers a solution to managers that are facing long delays to bring their funds to market on other exchanges because of increasing regulatory requirements. Bermuda’s strength as an offshore financial services leader owes much to its longevity in the business. As a pioneer of the offshore fund business, the island has established a commercially sensible level of regulation and created products that meet the needs of a sophisticated client base. The jurisdiction’s experience has produced a deep and knowledgeable infrastructure of service providers such as fund administrators, lawyers, banks, auditors and the BSX.
Launched in 1971, the BSX specialises in listing and trading of capital market instruments such as equities, debt issues, funds and depository receipt programmes. The exchange has carved a niche in the global funds industry; of more than 420 listings, nearly 350 are funds and more than 100 are hedge funds or have similar attributes. The exchange’s regulatory approach is based upon accepted international standards and seeks a balance between facilitating issuers’ access to the market and the safeguarding of investors and provision of information that enables informed decisions on the value, risk and merit of listed securities. The BSX has become the offshore location of choice for entities seeking a superior level of support and distinction from their listing, with more than half the funds listed on the exchange originating from other jurisdictions. Issuers also benefit from the award of Approved Stock Exchange status under Australia’s Foreign Investment Fund taxation rules and of Designated Investment Exchange status by the UK’s Financial Services Authority.
Greg Wojciechowski is president and chief executive of the Bermuda Stock Exchange
