Cayman Islands Hedge Fund Services 2012

By James Williams – With the search for alpha harder than ever, hedge fund managers are subsequently becoming more creative in how they trade: greater use of synthetic products and OTC derivatives has made the trading environment more complex, requiring hedge fund administrators to deliver better, more transparent reporting solutions, and provide close to real time NAVs and daily reconciliations across a range of asset classes. »

Interview with Darren Stainrod – “In the coming year, the biggest impact on administrators is going to be FATCA and the amount of reporting on investors that’s going to be required and whether that reporting is going to be to the Cayman government or directly to the IRS,” comments Darren Stainrod, head of UBS Fund Services, Cayman. »

By Ashley Gunning, Walkers – Twelve months on from the Weavering decision it is interesting to look at how the approach to corporate governance has evolved amongst our clients. Although the decision did not in itself create any new law, it has forced issues regarding independent directors and best practice to the top of the agenda. Weavering effectively provided a pertinent reminder to directors of investment funds as to the nature and extent of their fiduciary duties and how delegating functions to service providers and then taking a back seat can go badly wrong. »

By Ras Sipko, chief operating officer, Koger – Fund administrators are today under intense pressure to perform as they face greater scrutiny than ever before from clients. »

By Canover Watson, managing director, Admiral Administration – Worldwide, the hedge fund administration industry continues to go through an accelerating phase of consolidation. This is driven by the increasing sophistication of administration, with significant concomitant investment required to install and manage world-class technology platforms that enable administrators to meet these challenges and which offer economies of scale. While the systems have increased in complexity and cost, the skills required to provide these services have also increased dramatically, and the exponential increase in the use of OTC derivatives and illiquid assets has increased the complexity of middle and back office processes. »

Interview with Jeff Short & Keiran Hutchison – Although introduced a few years back, Financial Interpretation Number 48 (FIN 48) has recently become a high priority focus for Cayman fund managers involved in the liquidation of their fund(s). “Initially people were uncertain as to whether or not cheques would need to be written to various tax authorities around the world,” explains Jeff Short (AM partner) Ernst & Young. »

By James Williams – Last year’s Weavering case could have been a hammer blow for Cayman as the world’s leading offshore fund domicile. But, if anything, it helped reinforce its image as a jurisdiction where fund governance is taken seriously, where directors are members of the Cayman Islands Directors Association (CIDA), and where the island’s regulator, the Cayman Islands Monetary Authority (CIMA), is committed to evolving its fund regulation framework. »

By Mike Saville, Grant Thornton – Previously, a number of superstar hedge fund managers felt that investors should be honoured to have their subscriptions accepted, and consequently dictated the terms of the investment. Today, however, things have changed. Increasingly, institutional investors are dominating cash inflows to hedge funds, and their needs are different. Given the size of ticket many are writing, the tables have turned. They are now the ones dictating the terms to managers. Not surprisingly, the scene is set for conflict. »

By Ian Gobin, partner, Appleby – Want to set-up your own hedge fund? If so, you’re not alone. According to a recent report by the Financial Times, last year more than 1,100 new hedge funds launched globally, the highest number since 2007. »

Interview with Matt Mulry – Last year’s Weavering case, in which Justice Jones QC examined in detail the role of independent directors and the operation of a Cayman fund, proved to be a watershed moment for the Cayman Islands. »