Cayman Finance denies fund exodus to Europe

(CNS): The latest statistics from the country’s financial regulator reveal that there has been no exodus of funds from the Cayman Islands to Europe. Despite stories in the press of relocations Cayman Finance says that the percentage of de-registrations is still small and typical of the jurisdiction’s rate over the last few years. Statistics from Ireland revealing that the fund industry there has doubled recently to 7.4% pales into insignificance, says the Cayman Finance chair, compared to the size of the sector in the Cayman Islands. Anthony Travers said he was surprised that there was so much press coverage when only four funds have actually said moving to Europe was the reason for their termination.

The Cayman fund industry continues to grow by approximately 95 funds per month, according to the Cayman Islands Monetary Authority (CIMA). The regulator is reporting a natural attrition rate of de-registrations of approximately 5 percent, indicating stability in the local industry. According to the CIMA website there are currently 9,594 funds registered with the authority.

CIMA confirmed that only four funds have cited re-domicilation to the EU as their reason for termination – two of those funds to Malta and two to Luxembourg.

“If we sent out a press release each time a Cayman fund was launched, the international media would be flooded with two such announcements each day. A doubling of registered funds to 7.4% does not constitute news. What astounds me me is how these insignificant claims get column inches. These are statistics to be shy about,” stated Travers.

He cited a recent study conducted by International Fund Investment which has revealed that 60% of investors surveyed are against more regulation as it adds to increased costs (which directly impact returns) with no other discernable benefits, including investor protection.

This study also showed that only 18% of fund managers are even considering moving funds to the EU.

“For the institutional investors and managers the well understood path of the Cayman fund – non-bureaucratic, quick set up times, high quality service providers and its solid reputation is preferred Cayman is well-known and that familiarity breeds trust,” says Simon Osborn of International Fund Investment.

“A number of managers believe that the AIFMD could drive managers out of the EU and only managers serious about EU distribution will have EU domiciled funds. The rest will continue to use offshore structures,” continued Osborn.

“Comparing the information from the Cayman Islands Monetary Authority and the International Fund Investment report supports what the Cayman service providers are seeing,” stated Travers. “Investors are not looking for increased regulation. They are looking for returns and the emphasis is now on stress-tested products such as Cayman’s and effective due diligence to best protect their investments,” he continued.

When asked about the viability of the Irish claims of gaining large numbers of funds from Cayman, Travers pointed out that Ireland as a whole is in serious financial difficulty and it would be prudent for any investor or manager undertaking proper due diligence to consider very carefully the longevity and sustainability of Ireland as a domicile.

Cayman is well placed in terms of EUAIFM Directive and is compliant on the relevant issues. Cayman Finance is currently commissioning a ‘gap analysis’ to highlight any areas for improvement that will have positive effects in the long run.