Bush says legal changes will enhance fund business

(CNS): The Cayman government is planning to amend legislation to create a new Mutual Fund Administrators (MFA) license category to attract small to medium or niche service companies, the premier has told an industry magazine. The Cayman Islands leader has given two interviews recently to industry magazines which have featured the Cayman Islands offshore sector and in particular the fund business in special reports. In an interview with AR magazine – a publication of Institutional Investor & Hedge Fund Intelligence, McKeeva Bush said the change was part of the goal to develop greater substance in the area of mutual fund administration. (Photo Dennie Warren Jr)

“Currently, many of our licensees conduct only one component of mutual fund business, for example, registration and transfer agency services,” he told the magazine. “However, there is no provision in the Mutual Funds Law to allow an applicant to apply for a Mutual Fund Administrators license in order to conduct partial business. The new MFA License will cater to those entities looking to provide registrar and transfer agency services in the Islands. It will require a nominal net worth, professional indemnity insurance, and an obligation to have a principal office on island.”

Speaking with Hedge Fund Review for another Cayman feature, the premier said he was confident that the Hedge Fund sector would continue to be a “significant driver of growth and specialization.” He said it had helped solidify Cayman’s position in the global institutional investment community over the past 15 years.

“While the government does not break down revenue it receives from the financial services industry by sector, we do know that direct revenue from the financial services industry to government revenues is just below 40%,” he said. “We have a strong legal and regulatory framework for hedge funds that the global markets have recognized.”

With the largest proportion of hedge fund domiciles in the world, Bush said, “We see significant opportunity for the Cayman Islands to fully assert our position in the global institutional investment sector by building on success in the hedge fund industry to include reinsurance, investment management and sovereign wealth funds, among other related products and services.”

The magazines also points to the recent legal changes already made to the Company’s Law and the hopes that this will streamline activities in the financial sector. The intent is to increase the attractiveness of the Cayman Islands as a domicile for corporate entities and maintain its competitive edge, the magazine reports. Bush said he believes the amendments will create “new opportunities for growth in this key sector of our economy.”

Meanwhile, Dax Basdeo, chief officer, in the Ministry of Finance, said the amendments were critical in order to bring Cayman into line with or ahead of other jurisdictions.

The two reports feature a cross section of industry and government representatives talking up the industry in the wake of sustained attacks from the onshore world as well as concerns about the impact of regulatory changes such as EU Alternative Investment Fund Managers Directive approved last November. Andrew Morehouse, a Cayman Islands-based partner at law firm Ogier is quoted as saying: “We are happy that the directive doesn’t contain any nuclear material for Cayman.”

Meanwhile, Anthony Travers, the former chair of Cayman Finance, said, “This is not peace time,” as he believes “the forces of darkness are gathering” in problematic ways and there were very, very real threats from a number of different sources, all of which one can track back to the short fall in onshore tax revenues.

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See AR magazine report