Cayman hedge-services


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Caledonian offers a comprehensive range of financial services to individual and corporate clients in Cayman Islands, British Virgin Islands, Isle of Man, London, Orlando and New York.

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Cayman hedge-services

  1. 1. January 2011Cayman IslandsHedge FundServices 2011Rebound in funds Service providers ‘Mythbusters’confounds the highlight appeal of actively defenddoomsayers quality standards islands’ image
  2. 2. ContentS In this issue… 03 Four steps to maintain Cayman’s offshore leadership By Anthony Travers, Cayman Finance 04 Reports of Cayman’s demise exaggerated as industry rebounds By Simon Gray 07 An opportunity for start-up managers By Derek Adler, Ifina 10 The solvent fund wind-up process By Ingrid Pierce and Colette Wilkins, Walkers 13 Cayman keeping pace with the regulatory environment By Rohan Small and Jeffrey Short, Ernst & Young 14 Plain talking helps service providers get the message across By Simon Gray 19 Time to ease the burden By Alan Raftery, Koger 21 New demands keep administrators busy By Rick Gorter, Trident Trust Fund Services Publisher Special Reports Editor: Simon Gray, Sales Managers: Simon Broch,; Malcolm Dunn, Publisher & Editorial Director: Sunil Gopalan, Marketing Director: Oliver Bradley, Graphic Design: Siobhan Brownlow, Photographs: Courtesy of Cayman Islands Department of Tourism Published by: Global Fund Media Limited, 2nd Floor, Berkeley Square House, Berkeley Square, London, W1J 6BD Tel: +44 (0)20 7887 6326 Website: ©Copyright 2011 Global Fund Media Limited. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 2
  3. 3. IntRoduCtIon Four steps to maintain Cayman’s offshore leadership By Anthony traversThere’s no doubt that the global financial tackled in response to the changed globalmeltdown has resulted in a fundamentally environment.changed set of financial and regulatory First, to ensure substantial presence and acircumstances and a more hostile political viable local economy that provides sufficientenvironment. Yet it is perverse that the job opportunities for Caymanians, we mustCayman Islands have been the focus of implement immediately the suggestednumerous public relations attacks from G20 changes to immigration policy to providecountries that themselves have suffered 25-year security of tenure for financialbadly at the hands of the global meltdown. professionals wishing to establish operations The Cayman Islands’ regulatory system in Cayman.ensured that no financial institution failed, Anthony Travers is chairman of Secondly, we must continue to refuteits Aa3 Moody’s rating is superior to that Cayman Finance through our public relations campaign theof Ireland, and its budget, despite ludicrous nonsensical suggestions of the truth-deniersheadlines from a transparently briefed concerning tax evasion and tax haven statuspopular press, is now balanced. or indeed money laundering. What we do in Whilst we continue to identify and Cayman is lawful, proper and transparent,analyse the issues facing us with a view and we must continue to say realigning our financial services industry, Thirdly, we continue to reject thewe do so without taking overmuch note of suggestion from certain non-electedblame-deflecting politicians labelling us as European bureaucrats that we introduceimplicated in tax avoidance that arises from direct taxation. It can hardly be said thatflawed domestic legislation, or as having an their economies are a ringing endorsementinadequate regulatory system. of the concept, and our tax neutrality is now In the light of the blindingly evident superior to any and regulatory transparency, this type Fourth and lastly, we maintain appropriateof mischaracterisation can no longer regulation recognising that Cayman entities,be taken seriously – nor can European funds or otherwise, that elect to trade inUnion regulation that has more to do with onshore jurisdictions are subject to theseeking to constrain hedge funds from laws and regulation of those jurisdictionspricing European sovereign debt at its true in any event. The real question, given themarket value than any attempt to prevent constraints of the EU’s Alternative Investmenta repetition of the financial crisis. The fact Fund Managers Directive, is how many nowthat Cayman continues to register more will chose to do so in Europe.than 100 new funds a month is some With these policies in place, as theevidence that the market place endorses the statistics now make clear, we have no doubtCayman approach. that Cayman will remain at the forefront of We believe that the Cayman Islands the offshore financial centres, and indeedhave four central issues that need to be that its position as such will be enhanced. nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 3
  4. 4. oveRvIew Reports of Cayman’s demise exaggerated as industry rebounds By Simon GrayLike writer Mark Twain, who famously So far, however, most Cayman lawyersobserved, “The report of my death is an seem too busy setting up new funds toexaggeration,” members of the alternative spend much time worrying about their futurefund sector in the Cayman Islands have employment prospects. While levels ofbecome familiar with reading their own business have not returned to those seen atobituary. Since the onset of the financial the frothy heights of the boom in 2006 andcrisis, and especially the G20-led campaign 2007, new fund registrations are averagingto clamp down on opaque and poorly- nearly 100 a month, which works out at a netregulated financial centres, the world’s increase of around 60, according to Darrenleading offshore fund domicile has been Stainrod, head of alternative fund services atregularly written off by onshore competitors UBS Global Asset Management.and media commentators. “Over the past 18 months the rate of new For instance, last July the Financial Times start-ups and the allocation of capital to newcited hedge fund managers as saying that managers have certainly quietened compared“the future of the Cayman Islands as a hedge with the heady days of 2007,” says Ogierfund domicile is bleak.” Tiburon Partners’ partner Peter Cockhill. “There is no doubt thatMark Fleming was quoted as saying: “The the market has changed and that the timeCaymans will wither on the vine. It won’t between conception and realisation [of funds]go overnight but very few people are going has grown longer. We’re not back in the daysto set up there ... If I was a Cayman lawyer when you might be asked to set up 10 fundswith more than three or four years of career off the shelf in the space of a week.”expectation, I would wonder what I’m going However, Cockhill predicts that Caymanto do with the rest of my working life.” will soon break through the threshold ofCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 4
  5. 5. oveRvIew10,000 funds registered with the industry “The recent changes inregulator, the Cayman Islands MonetaryAuthority, and thereafter move back above regulation will not have athe quarter-end peak of 10,291 set at the significant initial impactend of September 2008 – just at the moment upon Cayman.”when the Lehman Brothers bankruptcytipped the financial industry into a fresh Anthony Cowell, KPMGspiral of decline. At the end of September 2010, 9,584 funds “We have made great strides in the pastwere authorised by Cima, down from 9,838 couple of years that demonstrate we wanta year earlier, but the regulator’s statistics to be a fully functioning and contributingshow that the sector has been growing again member of the global financial community,”since the first quarter of last year. The figures he says. “We have signed numerous taxdo not include closed-ended funds such as information exchange agreements withprivate equity structures for which there is no countries around the world, somethingregistration requirement; numbers are elusive, that shows ourselves to be a transparentbut Cayman lawyers say they account for a and co-operative jurisdiction. The days ofsignificant proportion of business volume. Cayman being perceived as a tax haven are The numbers – and other green shoots long behind us.”such as the establishment at the beginning KPMG partner Anthony Cowell adds: “A lotof this year of a Cayman chapter of the New of politicians and regulators wanted to pass onYork-based Hedge Fund Association – fly in the blame for the entire financial meltdown andthe face of the thesis of long-term decline the issues that they had in their local marketspredicted by doomsayers as a result of onto the Cayman Islands. However, accordinginstitutional investors’ supposed aversion to to our recent research, the additional regulationoffshore funds, the threat of unfavourable is not wanted by the majority of investors,regulatory treatment under the European managers or service providers.Union’s Directive on Alternative Investment “The widely held view is that the industryFund Managers, and the undoubted increased did not cause or contribute to the creditappeal to hedge fund managers and investors crisis, and investors don’t believe it willof the EU’s Ucits cross-border retail fund provide any tangible benefits. Moreover,regime as a vehicle for alternative strategies. many European investors believe that it will But Cockhill adds: “The signs at the reduce the number of start-ups, therebymoment are very encouraging, which is stalling the industry’s engine of creativity.testimony to two things. The North American It is very interesting to note that the recentmarket, which provides 65 per cent of our changes in regulation will not have awork, has come back, and we have seen significant initial impact upon Cayman.”no diminution at all in instructions coming Certainly industry members say thefrom Asia, principally the regions serviced much-discussed redomiciliation of fundsfrom Hong Kong, and from Latin America, domiciled in Cayman and other offshoreprincipally São Paulo and Rio de Janeiro. centres to onshore jurisdictions in Europe “Over the past two years Brazil has such as Luxembourg, Ireland and Malta,relaxed its regulations to allow Brazilian or to offshore centres perceived to be inmanagers greater access to international better odour with international regulators,markets, which has given momentum to the such as Jersey and Guernsey, has so faruse of Cayman funds as vehicles for their been tiny. They suggest that the high profileinternational investors. Right now, touch of the topic is down in large part to the PRwood, we seem to be in a sweet spot.” efforts of countries such as Ireland that see Don Seymour, managing director of themselves as potential beneficiaries.hedge fund governance specialist dms “Cayman continues to dominateManagement, argues that the jurisdiction’s the offshore hedge funds and privaterecovery owes much to the concerted efforts equity market, and we’re not seeing anymade by Cayman to meet international significant amount of that work leaving tostandards in regulation and transparency. go elsewhere,” says Neal Lomax, managing 9CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 5
  6. 6. ifina (UK) Limited Head Office 6, The Court Holywell Business Park Northfield Road Southam Warwickshire CV47 0FS United Kingdom Sales & Marketing Office One The Dell Bishopsgate Road Englefield Green Surrey TW20 0XP ifina (BVI) Limited Wattley Building 160 Main Street PO Box 4443 Road Town, Tortola British Virgin Islands ...introducing a International Financial Administration (USA), LLC 601 Lake Hinsdale Drive multi-jurisdictional group, providing Suite. 207 Willowbrook Il 60527 USA ifina (Switzerland) Limited Bahnhofstr. 52 investment fund 8001 Zurich Switzerland administration services ifina (Cayman) Limited Strathvale House 90 North Church Street PO box 2636 Grand Cayman Cayman Islands KY1-1102 ifina (Malta) Limited Palazzo Pictro Stiges 90 Strait Street Valletta VLT 1436 Malta ifina (Panama) Limited Suite 2410 Ocean Business PlazaAquilino de la Guardia Avenue (Marbella) Panama City Republic of Panama ifina (Austria) Limited Schottenring 16 A-1010 Vienna (Wien) Enquiries : Derek Adler +44 (0) 1784 433034 Austria
  7. 7. IFInA An opportunity for start-up managers By derek AdlerIfina has had a presence in the Cayman regulatory compliance and meeting rules inIslands for most of the past decade, but for areas such as capital adequacy can be amuch of that period the largest share of the heavy burden on new businesses.firm’s administration work has come from the The Cayman structure provides a veryBritish Virgin Islands. However, particularly good stepping-stone for managers in thisin the past year we have experienced a position. Ifina is careful to conduct thoroughsignificant increase in the volume of demand due diligence on its new clients, but thisfrom clients for servicing of Cayman- model allows serious professional moneydomiciled funds. managers to begin management of a fund, There are a number of reasons for the which they might not be able to do in certainsurge in new Cayman activity. First, we are Derek Adler is a director of other jurisdictions. With so many individualsvery much a client-driven business that aims Ifina (UK) leaving institutions over the past year to startto provide our customers with a choice. If up their own business, it’s not surprising thatthey perceive that Cayman is their preferred Cayman has been such a popular choice ofdomicile, and that fits with their marketing fund domicile.and their own structure, we are happy to In addition, even after the crisis, mostcomply with their wishes. administrators are reluctant to take on One of the advantages of Cayman as new managers with as little as USD5m ora fund domicile is that we can enable a USD10m in assets, no matter what their futuremoney manager to run a Cayman-registered potential. By contrast, Ifina has long beenfund without having a licensed management ready not only to service start-up funds butcompany. Instead Ifina takes responsibility for to provide a structured framework – crucial inthe correct establishment and management the first months of a new operation. Many ofof the fund. While it’s generally desirable for our clients subsequently become regulated inmanagers to be regulated in one jurisdiction their home jurisdiction once their business isor another, there are circumstances where properly up and running.the Cayman solution is particularly helpful Ifina has established a managed account-and pragmatic. style umbrella fund structure within which Over the past couple of years, the demise start-up money managers can establish theirof Lehman Brothers and other banks, the own sub-funds. The Primary Developmentdivestment of alternative asset management Fund and each sub-fund can accept seedand proprietary trading operations in capital as low as USD1m, offering allresponse to the Volker rule in the US and the benefits of a regulated mutual funda broader exodus of traders and asset coupled with tremendous initial and ongoingmanagers from the ranks of banks and cost savings.brokerages have prompted a significant influx This framework is designed to enableof new managers into the market. the potential future manager stars of Start-up hedge fund managers may have tomorrow to achieve their potential. Historyinnovative ideas and loyal clients from their tells us that start-up managers often deliverprevious businesses, but they may not be better performance than large and long-starting out with a large volume of assets established firms, and the Cayman modelunder management. The time, effort and cost gives newcomers the chance to proveof establishing robust structures, achieving their worth. nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 7
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  9. 9. oveRvIew5 partner of law firm Mourant Ozannes in the by secondary legislation and regulations Cayman Islands. “Certain rival jurisdictions to be promulgated over the next two years such as Ireland have made a lot of noise by the European Commission, and future about one or two firms redomiciling funds, changes such as the opening up of the but it has been literally one or two.” passport system and the abolition of private Cockhill notes: “Luxembourg and Ireland placement arrangements will also require have both been saying that in the light of the further legislation of this type. AIFM Directive, managers should consider These concerns have been allayed to getting ahead of the curve by setting up in some extent by changes made in the directive a European jurisdiction. The Irish changed during the legislative process, making clearer their law in December 2009 to allow transfers the basis for determining the acceptability of by way of continuation – something long non-EU jurisdictions as a domicile for funds available in the major offshore centres – qualifying for distribution within the union. For and trumpeted that they were about to be example, the compliance of such jurisdictions deluged by funds moving from Cayman. But with international anti-money laundering up to the end of the third quarter of last year, standards will be measured by their standing Cima’s records show that only four funds with the Financial Action Task Force, while had left Cayman, two to Luxembourg and their tax transparency will be determined two to Malta.” by the conclusion of OECD-standard tax With the EU directive having been finally information exchange agreements with EU agreed in a compromise form for which member states. industry members generally have little Tax transparency may be an important enthusiasm but which most say they can live issue for the offshore banking and fiduciary with, it will be harder to convince managers sectors, but it is beside the point for the fund in the future that a European domicile is the industry, according to Derek Adler, a director only option, Cockhill argues. of fund administrator Ifina. “Running around “The good news from our perspective, signing tax information exchange agreements and that of the fund managers, is that the simply means you are signing up to the rules directive has finally arrived at a decent of the club,” he says. “That’s helpful because compromise,” he says. “That game has it tells our clients that Cayman is a serious come to an end, and I don’t expect to see jurisdiction and is on the OECD white list, more of those horror stories appearing in the but it matters far more for financial planners press. Our statistics show that people aren’t and trust companies. buying it. If you’re a third-country manager “By contrast, it doesn’t make any real you can still distribute in Europe through difference to the fund business, which private placement, and you will have the has always been regulated and properly option to obtain an EU passport.” monitored, and has always offered The AIFM Directive, which is set formally transparency. For many investment managers to become law during the first quarter of it doesn’t matter how many Tieas a this year and will come into force two years jurisdiction has as long as they can set up later, is set to allow non-EU funds access to a fund structure in a regulated jurisdiction, a European single market of sophisticated their investors can have confidence that their investors from 2015, two years after funds money is safe, and the fund is being serviced that are both managed and domiciled within by an independent third-party administrator.” the EU. In the meantime existing national Neither the anti-money laundering nor the private placement regimes will remain tax co-operation requirements appear likely available, although the legislation envisages to cause any problem for Cayman. “By any their eventual disappearance once the objective standard, jurisdictions including passport system offers all managers the Cayman and the British Virgin Islands will opportunity to distribute funds within the EU pass the tests that will allow our funds to be on an equal basis. marketed under the passport regime,” says One slight area of concern remaining for Henry Smith, global managing partner of the industry outside Europe is that much of Maples and Calder, the international law firm the detail of the directive will be filled out that has its head office at the now-famous 11 CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 9
  10. 10. wA l k e R S The solvent fund wind-up process By Ingrid Pierce and Colette wilkinsFollowing the global financial crisis, investors In any event, simply because the courtunhappy with an informal wind-down has jurisdiction to make a winding-up orderprocess are increasingly seeking to bring does not necessarily mean that it will.that process to an end and have the board The manager or directors may well still bereplaced by a court-appointed liquidator. considered the best placed to extract the With solvent funds also being targeted, greatest value from the fund’s portfolio, andmanagers need to be aware of the we have already seen the court adopt acircumstances in which an informal wind- commercial approach and provide alternativedown can, and should, be replaced with relief available under the Companies Law,a formal liquidation and, conversely, the rather than the draconian and final stepoptions available to counter such action of liquidation.or enhance constitutional documents to Upon learning of a winding-up petition,mitigate risk. managers should immediately consult There is no doubt that an insolvent fund their offshore and onshore counsel andcan be wound up by the Grand Court of seek urgent advice regarding whetherthe Cayman Islands. For a solvent fund, it is appropriate for the fund to resistthe court has jurisdiction to wind up on the petition.a shareholder’s petition where it is ‘just As a petition can effectively paralyseand equitable’ to do so – that is, in certain a fund’s ability to operate, action shouldlimited circumstances such as fraud, generally be taken swiftly. If it is to bemismanagement or minority oppression. Ingrid Pierce and Colette resisted, consideration should be given A recent trend has been for disaffected Wilkins are partners at to a strike out, an application to ‘validate’investors to argue that the purpose for which Walkers in the Cayman Islands the fund’s ability to make ordinary coursethe fund was established – active investment payments, and possibly injunctive relief.– can no longer be achieved upon a lengthy Conversely, management should besuspension of redemptions or a ‘soft’ wary of expending the fund’s resourceswind-down; put another way, the fund’s in unnecessarily defending a legitimate‘substratum’ has been lost. petition, although of course the views of A number of recent Cayman cases other investors will be crucial. Adverse costshave held that the mere fact that it has consequences may also arise. Regularbecome impractical for a fund to continue investor communication will be key.its investment business (as set out in its In addition to the options set out above,offering document) is sufficient for the court if possible, an accelerated return of capitalto make a winding-up order. may resolve the issues. Flexibility within We prefer the alternative view, supported the investment management agreementby other first-instance decisions in the regarding fees payable during a softCayman Islands and the BVI, that the wind-down, the utilisation of independentpurpose or substratum of a fund is wider directors not affiliated with the manager,than pursuing a certain investment strategy, fund documents that expressly contemplateand includes realising investments and a wind-down by incumbent managementreturning proceeds to investors prior to a and appropriate non-petition language areformal liquidation and dissolution. certainly worth considering. nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 10
  11. 11. oveRvIew9 Ugland House in George Town, the Cayman “By any objective standard, capital, and the registered office for almost 40 per cent of the world’s hedge and private jurisdictions including equity funds. Cayman and the BVI “Those provisions apply not only to will pass the AIFM traditional offshore jurisdictions but to anywhere outside the EU. We think we are Directive tests.” already a long way up the curve toward Henry Smith, Maples and Calder satisfying the tests demanded under the various criteria, whether for the private very encouraged that the Committee of placement option in the interim phase up European Securities Regulators [predecessor to 2018 or the passport, if the European of the new European Securities and regulators do actually apply it to non- Markets Authority] has mentioned the Iosco European funds and managers.” framework as something that could be However, the requirement for co-operation considered. The preamble to the directive arrangements to be put in place between and G20 statements underline that the the financial supervisor of the fund domicile co-operation arrangements should not be and that of the EU member state assuming used to discriminate against countries. regulatory responsibility for managers of non- “Our concern was that they might require EU funds remains a grey area. Until such time bilateral treaties between each of the 27 EU as the Commission provides a template for member states and every non-European such co-operation, it will not be possible to country. You can’t imagine how long and banish completely fears that the rules may complex negotiating all those bilateral be drawn up in such a way as to allow EU treaties with every country outside the EU member states a subjective choice on which would be. That just doesn’t make sense, fund domiciles to accept and which to exclude. especially if the overriding objective is to “The devil will be in what these introduce a globally-agreed framework of regulations are,” Cockhill says. “Managers regulation of systemic risk issues within a will need to make an assessment over the reasonable timeframe. By contrast, the Iosco next few years on whether or not they want multilateral agreement would tick a lot of the to go for a full passport or whether they boxes from a European perspective.” will continue to market their fund discretely One of the flaws in the arguments of through private placement [as long as this those predicting Cayman’s eventual decline remains permitted]. It really depends on as a fund domicile is the assumption the proportionality of the regulations the that most if not all managers will require Europeans come up with.” access to the European market as a matter Smith notes: “Cayman and the BVI are of course. Smith notes: “Some European already party to the International Organization jurisdictions historically have not had private of Securities Commissions multilateral placement regimes, which made it difficult memorandum of understanding. There is to market non-European funds there. The already significant co-operation between their passport could offer an opportunity to regulators and other parties to the Iosco access those markets. memorandum of understanding. We have “But the passport may not be particularly significant bilateral co-operation agreements helpful for non-European-based managers with the UK’s Financial Services Authority that don’t have pan-European marketing and the US Securities and Exchange and distribution capabilities, but might just Commission as well, and Cayman and the be looking at one or two major investors BVI already have tax information exchange or pension funds in a couple of countries. agreements with most of the major EU Private placements arrangements may have member states. worked very well for their purposes, as well “We have been lobbying the Europeans as giving European pension funds access to look to the Iosco framework as a means to this type of fund. Ultimately a decision on of satisfying the regulatory co-operation whether to seek a passport will come down requirement of the directive, and we are to how Eurocentric each manager is.” n CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 11
  12. 12. Ready for a change? Ready for a change? each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm located in the US. In uncertain times, times, how you respond to market ups and downsmake all the all the difference In uncertain how you respond to market ups and downs could could make difference. Ernst & Young refers to a global organization of member firms of Ernst & Young Global Limited, We can help you ride the storm.storm. With assurance, tax and business advisory professionals We can help you ride the With assurance, tax and business advisory professionals acrossacross the dedicated to the hedge hedge fund industry,positioned to helpto help you tackle the globe globe dedicated to the fund industry, we’re we’re positioned you tackle volatile market situations whenever and wherever they arise. And in And in an uncertain world, volatile market situations whenever and wherever they arise. an uncertain world, that’s what itwhat itto helpto help your business achieve its full potential. that’s takes takes your business achieve its full potential. What’s next next for your business? What’s for your business?© 2008 ERNST & YOUNG LLP. !@# !@#
  13. 13. eRnSt & YounG Cayman keeping pace with the regulatory environment By Rohan Small and Jeffrey ShortThe Cayman Islands – one of the world’s These changes will not only haveleading offshore jurisdictions for the a material impact on operational andestablishment of investment funds – has compliance requirements and processes butfaced many tests to copper-fasten its also possibly entail an increase in documentdominant position. And now, even in the requests and examinations by the SEC.face of its toughest test ever in terms At Ernst & Young we are keenly focusedof intensifying laws on regulation and and involved in preparing our clients for thistransparency, both from the European Union new landscape. We are providing guidanceand the US, the fund jurisdiction looks set to by reviewing their infrastructure, reportingovercome yet another hurdle. and record-keeping, IT systems, assessing, Take the new EU Alternative Investment designing and implementing appropriateFund Managers Directive. The AIFMD will compliance programmes, and performingimpose a number of additional registration gap analyses and mock examinations toand reporting requirements on alternative ensure compliance.investment funds as well as applying limits There is clearly no doubt that the Caymanrelating to manager remuneration. From a Islands are facing stronger competition.Cayman perspective, it will mean that a non- Cayman has a long history of workingEU manager will need legal representation together with foreign regulators and is highlyin its member state of reference and comply rated by the Financial Action Task Force. Thewith the provisions of the directive in full, Cayman Islands Monetary Authority has alsoalong with the jurisdiction meeting certain confirmed its commitment to entering into Rohan Small is an auditother conditions. partner and Jeffrey Short a co-operation agreements with EU regulators Cayman is confident that it will meet financial services partner at as a matter of priority. All this augurs welland comply with these provisions. Various Ernst & Young in the Cayman for the industry, which is extremely receptive Islandsparties in Cayman are already preparing and, more importantly, well prepared for thefor enhanced regulatory co-operation and anticipated changes.the increase in transparency and reporting It is also important to point out thatrequirements. Cayman is currently setting up approximately On July 21, President Obama signed into 100 new funds per month and will soonlaw the Dodd-Frank Wall Street Reform and be back to pre-crisis levels in terms ofConsumer Protection Act. This will have registered funds.the most sweeping impact on the financial Changes are afoot and the dynamic naturesystem since the Great Depression. It of the Cayman Islands will allow it to fit wellwill require many investment advisors of into this new alternative investment era. Thehedge funds and private equity funds to investment industry in the Cayman Islandsregister with the Securities and Exchange is well on its way to fine-tuning its regulatoryCommission. In addition, there will be regime, operational processes and strategies,new record-keeping requirements and be it for the AIFMD or US registrationcompulsory disclosure of certain financial responsibilities, to ensure continued successand operational information. in this new environment. nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 13
  14. 14. on d u v I e w I veRStRY Plain talking helps service providers get the message across By Simon GrayFor years, industry professionals Firm, the 1991 blockbuster novel by theacknowledge, the Cayman Islands financial hitherto unknown John Grisham, whichservices sector – and the territory’s painted a picture of a jurisdiction awash withgovernment – remained largely silent as the criminal cash brought in by the suitcase-fulljurisdiction was branded as the epitome of – cemented two years later by an equallythe real and supposed ills of the offshore successful film, starring Tom Cruise. The factfinancial industry – tax evasion, money that extensive scenes were filmed in Grandlaundering, fraud and worse. But those days Cayman, its beaches and hotels gave theare now decisively over. film an unfortunate verisimilitude. For at least two decades the islands More recently, as a Democratic Partyhave suffered from a dramatic dichotomy candidate for the presidency and again afterbetween its image among financial sector taking office in January 2009, Barack Obamaprofessionals, among whom its depth of repeatedly cited Ugland House – the Caymanexpertise and experience is well established, home of law firm Maples and Calder – asand that held by the general public – including the home of 12,748 (later 18,857) companies.many politicians, for whom ‘Cayman’ often “Either this is the largest building in theserves as shorthand for the squirreling away world or the largest tax scam in the world,”of money out of sight of the taxman. Obama said. Perhaps few things contributed as much Less widely reported is the fact that whento this unfortunate public image than The a team from the United States GovernmentCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 14
  15. 15. InduStRyAccountability Office was dispatched to “There’s still a huge amountCayman by the Senate Finance Committeein 2008 to investigate Ugland House, they of misinformation aboutfound that only 5 per cent of the companies Cayman disseminated,incorporated with the building as their and it’s very frustratingregistered office were wholly US-ownedand fewer than 50 per cent had a US to see the inaccuraciesbilling address. They included investment that appear.”funds and structured-finance vehicles, as Neal Lomax, Mourant Ozanneswell as vehicles used or supported by USgovernment agencies, the Export-ImportBank of the United States and the Overseas this reality will become better understoodPrivate Investment Corporation. and more broadly acknowledged by policy- It’s appropriate, then, that efforts to counter makers and others as the reasons forwhat at times has been a barrage of negative the recent financial crisis are more fullycomment and inaccurate information about analysed and as the ensuing regulatorythe Cayman Islands are being spearheaded response evolves.”by Anthony Travers, a longstanding senior Some industry members are more forcefulpartner of Maples and Calder who helped to in their response to the criticism, noting thatdraft much of the jurisdiction’s key financial while the Obama campaign was expressingservices legislation. shock about the number of companies at Since Travers became chairman of industry Ugland House, the home state of his vice-association and promotional body Cayman presidential running mate Joe Biden, Delaware,Finance in 2009, the organisation – itself boasts buildings housing the registered officesrenamed from the rather less snappy Cayman of as many as 120,000 companies.Islands Financial Services Association – has Ogier partner Peter Cockhill agrees that thebecome proactive in tackling and refuting change of strategy is overdue. “Unfortunatelyinaccuracies and misinformation about in the past we may not have paid enoughCayman wherever they appear. attention [to adverse publicity], we were far Arguably it’s something that should too reactive, but that’s changed in the pasthave been done earlier. “Having a single 18 months,” he says. “We have an invigoratedbody representing the Cayman financial financial services body, Cayman Finance,services industry was long overdue, but able to spread a message and disabuse thesince its establishment Cayman Finance mythmakers. When we see an ill-informedhas done well in responding to some of the statement or wrongful characterisation, wemisinformation about the jurisdiction,” says immediately respond – our approach isNeal Lomax, managing partner of law firm zero tolerance of misinformation. And that’sMourant Ozannes in the Cayman Islands. “If beginning to pay dividends.”there is a negative, it is that we should have Alan Milgate, a director of Harbour, a firmstarted it five or six years ago.” that specialises in providing independent Lomax says the task is a never-ending directors and trustees to funds in Cayman,one. “There’s still a huge amount of says local companies have banded togethermisinformation about Cayman disseminated, to defend the jurisdiction and to conveyand it’s very frustrating to see the a coherent message to the outside worldinaccuracies that appear,” he says. “Cayman about the quality products and services thatis a well-regulated jurisdiction where hedge the islands offer. “All the service providersfunds and other investment vehicles suitable here are making a concerted effort tofor institutional investors can be set up on a create a united front to stand up for ourtax-neutral basis. jurisdiction,” he says. “While the importance of a tax-neutral “We’re very proud of our product andplatform may be misunderstood in some that we won’t let false representations goquarters, the reality is that the world financial unchallenged. Cayman Finance is activelysystem needs such jurisdictions to facilitate searching for inaccurate stories and rebuttingcross-border capital flows. Our hope is that them, but at the same time service providers 17CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 15
  16. 16. InduStRY15 are going out to sell our product much more “Our approach is zero aggressively than we have in the past.” Milgate says the financial crisis, which saw tolerance of misinformation, a dip in both the number and the aggregate and it’s beginning to pay assets of Cayman funds as well as a dividends.” downturn in other major business areas such as securitisation, has prompted a wide-ranging Peter Cockhill, Ogier rethink of the way the jurisdiction is marketing itself. “It has forced us to look at what we’re with a structure and a long track record, are offering people and to improve it, and to seeing capital inflows.” understand better what they want,” he says. He adds: “Large institutions are still “We continue to have a great advantage allocating capital to hedge funds or even here in having a government and a increasing their allocations, but this process regulatory body that interact actively with is favouring the bigger managers. There is the local industry. We’re very fluid, enabling still nervousness among allocators in the us to develop our laws and regulations and wake of the financial crisis, and no-one will strengthen our product much more quickly ever get fired for allocating to a big manager. than many other jurisdictions. Whereas eight They are still cautious about taking a risk or nine years ago people were more focused on a smaller, less established manager, and on running their own businesses, today we certainly a start-up.” recognise that we all have a responsibility to KPMG partner Anthony Cowell says: “A the jurisdiction if we are to be as strong as few years ago we would see capital coming we need to be.” in within a few months of a start-up, but Certainly the current inflows of new now that period is being stretched, even business indicate suggest that the Cayman though the environment now is clearly better name is not putting off institutional investors, than what it was. There is consolidation as as was suggested might be the case a year some larger managers grow by taking over or two ago. Industry members report that smaller competitors. Meanwhile, what we much of the capital returning to hedge funds call entrepreneurial institutional managers is going to established managers with solid are diversifying into mainstream fund reputations, and that while a wave of new management, proprietary trading, restructuring talent is entering the market, spinning off of distressed vehicles and structured products from existing managers or big institutions rather than just hedge funds. shedding proprietary trading operations, they “That’s a huge change for the industry. are finding the money-raising process long Previously managers tended to offer core and arduous. products, and grow into super-boutiques, “We are finally seeing some growth but now firms are coming out with a huge returning to the market following the financial variety of products to attract institutional crisis, but it is a lot slower than what we capital. Sometimes the products stick, saw during our heyday, and funds are sometimes not. The difference between certainly a lot smaller,” says Don Seymour, these players, whose controls and processes managing director of corporate governance are institutional, and traditional asset specialist dms Management. He notes that management houses is that they’re very there is a lot of interest in start-up activity, much more focused on generating alpha.” but the capital-raising process is much more Cowell argues that the new money is not protracted than three or four years ago, all institutional: “Interestingly, high net worth especially for smaller managers. investors are coming back into the industry, “One large administrator told me they had albeit principally to larger rather than smaller something like 40 start-up managers in the managers and to fairly straightforward pipeline, but they can’t launch their funds strategies. The fact we’re starting to see new because they haven’t been able to raise inflows from high net worth individuals as sufficient capital,” Seymour says. “There is well as institutional investors is very positive a big-name bias. Our existing clients, who for Cayman.” have been established for 10 years or more Large institutional managers have largely 20 CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 17
  17. 17. What’s missing?Admi is r torNTAS is the missing piece of your fund administration puzzle. As the premier CONTACTshareholder register and transfer agency system in the market, NTAS supports Europe Keith Parkera broad range of fund structures including master-feeder, fund of funds, series 353-1-476-4120of shares, equalization funds, limited partnerships, private equity, money Australiamarket, and side pockets. NTAS also offers a list of other modules including: cash Dave Owensmanagement,document tracking, anti-money laundering, and much more. 612-9299-3161 x 301 USA Chris DeNigrisIKAS (Integrated Knowlede Based Accounting System) is a dynamic plug-in designed 201-291-7747 x 121to support most fund structures created in NTAS. IKAS instantaneously shares Emailinformation with NTAS and provides fund accounting functionality and reporting. Information@KogerUSA.comE*TAS (Electronic Transfer Agency System) is a front-end web portal for investors,fund managers and other interested parties to have real-time access to shareholderinformation such as reporting and balances. www.kogerusa.comUSA IRELAND AUSTRALIA SLOVAKIAFor more information, contact Koger at 1-201-291-7747 or visit our website at .
  18. 18. koGeR Time to ease the burden By Alan RafteryThere is a new-found hedge fund a necessity and also where investors areenvironment and the message for all asking for greater granularity.involved is clear – be prepared. Today, it ETAS also applies within the context ofis vital for all in the hedge fund industry to liquidity, as by allowing authorised thirdhave the right tools to survive and succeed parties to access information, it enablesin a volatile setting. them to quantify the liquidity position of their One of the most important requirements the right technology and operational The alternatives arena demands extremelyinfrastructure, one that can deliver the robust operational processes and softwareservice levels required by clients and their solutions. Hedge fund managers lookinginvestors, and that can ensure smooth Alan Raftery is head of to attract new money need to make suretransition of front-to-back offering – from operations with Koger in their technology is right in order to ease theorder management through to accounting. Dublin burden on the investment manager – whoseIncreasing efficiencies while having the main responsibility lies in creating alpha.flexibility to adapt to different trends is Hedge funds and their service providersdefinitely the order of the day. must have fully integrated software solutions The alternative investment industry that help them to meet their goals andcontinues to go through a period of provide the highest levels of client service,transformation in the wake of the global systems that enable them to stand out in thisfinancial crisis, mainly driven by a swathe of new era and allow them to cope better withnew regulation across various jurisdictions. market dynamics and turbulence.This trend will place greater demands on the Koger’s main transfer agency platform,operational component of the industry. NTAS (New Transfer Agency System), has A particular area that will be impacted been built on the basis of all complexis anti-money laundering measures, and processes, such as end-of-period incentivespecifically the need for identification of fee processing, being fully automated,underlying beneficial owners. There will also thus eliminating manual errors and cuttingbe a greater focus on liquidity as managers processing time to a minimum. Koger hasanalyse the mechanics of the European also recently launched SWIFT-compliantUnion’s Ucits regime. For example, will 20022 messaging capabilities that will drivethey be able to generate acceptable returns efficiencies for our clients by reducing theconsidering the restrictions inherent in the cost of trade delivery and receipt, with theUcits rules? added benefit of reducing manual errors. At Koger, we have the necessary solutions Koger’s products can also help reduceto assist clients in addressing the added costs through our rule engine, which allowsissues in the field of transparency and exceptions to fund level rules for chargesliquidity. Our web front-end product, ETAS such as management, administration and(for Electronic Transfer Agency System), incentive fees.allows authorised third parties such as asset Overall we see compliance and liquiditymanagers and investors to generate reports playing a major role over the next year oron a real-time basis. This is consistent two. In an ever-evolving industry, Kogerwith recent market developments where is well placed to service the needs ofincreased access to information has become managers and administrators alike. nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 19
  19. 19. InduStRY Global Asset Management, Cayman’s largest fund administration business. “We’re seeing a fair number of launches from new managers leaving prop desks to set up their own businesses and spin-offs from existing managers, although they are struggling to attract the start-up capital they might have done in the past.” In addition, he says, the beleaguered fund of hedge funds industry is showing renewed health, albeit a year after the single manager hedge fund sector began to enjoy renewed inflows. “Our fund of funds clients are now seeing a lot of activity in terms of requests for proposal. In addition, we are seeing large inflows from family offices, sovereign wealth17 resumed their pattern of activity from before investors and other institutional investors.” the crisis, according to Ingrid Pierce, a partner To help start-up managers get their and head of the Cayman Islands hedge business underway despite the capital funds group at law firm Walkers, but she says constraints, administrator Ifina has just newcomers are starting to gain some traction, launched the Cayman-domiciled Primary especially if they have a track record from Development Fund, a segregated portfolio another firm. “Our staple large clients may umbrella fund allowing managers to establish have experienced some dislocation, and they a regulated, audited and transparent fund at may not be completely back to normal, but a vastly lower cost than would be entailed they are continuing to set up funds,” she says. by going it alone. Ifina’s partners in the “However, there seems to be much more venture are Barclays in the Isle of Man, movement among start-up managers now offering banking services, broker MF Global, than earlier last year, when there was a lot auditor Baker Tilly and Cayman law firm of noise that didn’t translate into actual fund Solomon Harris. launches. “Particularly over the last year or so, many “By and large, these start-up clients have traders have left banks or brokers with some some sort of track record, perhaps because sort of client base and an asset management they’ve been affiliated with a well-respected idea,” says Ifina (UK) director Derek Adler. manager. There aren’t that many truly “But to get the business up and running, get new boys – more those who have build a regulated and meet requirements such as reputation somewhere else and have taken it capital adequacy rules takes time and effort, to a new outfit.” as well as money that the start-up manager One of the most important changes to may not have to begin with. the alternative investment management “The Cayman structure provides an environment since the crisis has been the opportunity and a stepping stone for serious adoption (more or less) of the Volker rule, professional money managers – although we conceived by the former US Federal Reserve check out their credentials very thoroughly. chairman and more recently Obama adviser It would not be possible for some of these Paul Volker, designed to restrict proprietary new managers to set up a mutual fund in trading and other types of speculative another jurisdiction, but the Cayman rules investment by US commercial and investment make it possible. banks. Despite the currently difficult fund- “Very few fund administrators will take on raising environment, this could prompt a managers starting up with as little as USD5m continuing flow of business for Cayman over or USD10m, but that’s right up our street. the long term, according to industry members. It provides the managers with a structured “In a way, the Volker rule is actually framework that they can’t get elsewhere, helping Cayman,” says Darren Stainrod, and in fact many of the new businesses head of alternative fund services at UBS we take on become regulated in their home 22 CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 20
  20. 20. TRidenT TRuST fund SeRviceS New demands keep administrators busy By Rick GorterEarlier this year, a shadow seemed to hang report on the fund’s performance.over the fund administration sector in the With increased regulation and the burdenCayman Islands, amid reports of staff cuts of compliance, administrators are well placedand movement of operations to lower-cost to shoulder much of this burden, as theyjurisdictions. While some of this may have are more in tune with the regulatory andtaken place, the overall view of the sector is corporate requirements of the jurisdiction ofthat of steady growth. domicile. Indeed, compliance has become a As the world moves further away from growth business for fund administrators.the financial downturn, the alternative asset Hedge fund managers are increasinglyinvestment sector is looking at the future turning to independent third parties forfrom a positive viewpoint. From a fund Rick Gorter is managing middle- and back-office functions includingadministration perspective, business can only director of Trident Trust Fund portfolio accounting and reconciliation, pricingget bigger. After the Madoff scandal, most Services Cayman and valuation, custody of both collateral andhedge funds have parked their administrative non-collateral assets, cash management, NAVresponsibilities in the hands of a third-party calculation and counterparty risk mitigation.specialist. Investors now want independent Independent administrators offeradministration at all costs, insisting a sophisticated IT platforms and relatedsecond set of eyes is overseeing the asset internal controls and procedures that providemanager’s activities. for the proper accounting, valuation and The logic is compelling that a hedge reporting of fund positions. They are alsofund cannot umpire its own game, but it themselves subject to internal and externalhas taken some time for this to become audit and regulatory scrutiny to ensure thethe administration paradigm. The US has integrity of their operations.only recently caught up with European Proper administration is a long-termfunds, which have employed third-party litmus test for investor confidence. It is alsoadministrators for quite some time. in the interest of the fund sponsor, whose The related truism is that the main own returns from the fund can be affectedresponsibility of fund managers is the by the quality of administration. Investormarketing of their fund and the management sophistication and growing complianceof investor assets. Their intellectual capital is and regulatory requirements demand newbest exploited in these activities, rather than in levels of transparency – and an independentthe time-consuming administration of the fund. administrator can make sure that these Independent administrators help fund levels are achieved.managers in a variety of ways. For example, From a Cayman perspective, the industrythey provide an extra level of security has come a long way. The islands haveagainst fraud as a third party responsible stood the test of time to become one offor confirming that the hedge fund has the the most flexible, efficient and experiencedassets it says it does and that the valuation hedge fund domicile and servicingprocess has been properly applied. Investors jurisdictions. And when the AIFM Directivealso customarily want the reporting function and new SEC regulations come into force,relating to a fund to be independent of the the islands are likely to see continued growthfund sponsor, which is achieved by using a in demand for the spectrum of servicesreliable and experienced third party that will independent administrators can offer. nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 21
  21. 21. InduStRY20 jurisdiction, such as the UK, within six systems, SAS 70 certification and appropriate months or a year. But in the meantime it professional indemnity cover.” provides a start to managers who might turn Essentially, Gorter argues, investors want out to be the industry stars of tomorrow.” to see administrators offering an independent Cayman may not have the capacity to institutional operational environment. provide on-island services to all the funds “They also require independent directors, domiciled in the jurisdiction, but the size of its individuals who actually provide meaningful administration sector is often overlooked. Like oversight to the operations and do not have the industry as a whole, administrators have conflicts of interest with the other service suffered from the shrinkage of fund numbers providers,” he says. and assets as a result of the crisis – the “In a nutshell, the regulatory environment number of firms holding full licences fell from has increased exponentially, and so has 102 in at the end of 2008 to 94 in September investor due diligence. Whereas in the past 2010 – but there are signs of recovery, like the investors might have distanced themselves establishment of a Cayman office last January from the fund’s operations, now they’re not by HedgeServ, which is now one of the top 15 only doing due diligence on the fund but administrators worldwide. also on its service providers, especially the “We have been seeing new business administrator.” mostly from existing clients, and activity this The presence of independent directors on year has been stronger on the private equity the board is also more important than three side than among hedge funds,” says Rick or four years ago, according to Seymour, Gorter, managing director of Trident Trust who as head of the investment services in Cayman. “Toward the end of last year, division of the Cayman Islands Monetary however, we saw increased interest in the Authority, the industry regulator, established launch of new funds, especially from the Far the regulatory framework for hedge funds in East, although we have also been winning the late 1990s. Within a few years, he says, business involving existing funds being it became clear that the common thread in transferred to us from other administrators.” enforcement cases against Cayman hedge However, Gorter is confident about the funds that were not being operated in a fit future outlook for the industry. “Cayman and proper manner was a lack of proper offers a very sophisticated administration corporate governance. base, with the expertise and experience that “Although we had the best independent may be lacking in some of the international administrators and auditors, where things financial centres new to the business, and were going wrong was that we didn’t have in terms of IT infrastructure we can offer the best independent directors, which the same if not better service as onshore was the final piece in the fund control centres,” he says. structure,” Seymour says. “But the industry “In the case of some clients for which has changed dramatically since 2000 and previously we might have been doing independent directors are now viewed as a registrar and transfer agent work, we are critical piece of the fund control structure. doing full administration. This reflects the “To be successful marketing a fund today, impact of the Madoff and other scandals you need best of breed standards in the in the US, which has led investors to push areas of transparency, liquidity, infrastructure managers to use external administrators and independence. These issues were rather than do it in-house. Third-party already coming to the fore, but Madoff administration has long been the norm in brought them more sharply into focus. Europe and now it is becoming so in the US. There was not proper segregation and due “Trident is also benefiting from investor diligence within his structure, and it showed demands about the kind of service providers investors everywhere that these are critical managers use, especially in the case of issues. It is investors that are now driving larger funds. They are insisting not only demand for independent directors. They that the administrator is independent but recognise that a good independent director that they are a business of substance, with on the board is one of the best insurance an international footprint, state-of-the-art IT policies against things going wrong.” CAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 22
  22. 22. InduStRy Milgate says it’s important not only that “Some clients prefer workingdirectors be independent and bring relevantexpertise to the job but that where practical with a Cayman serviceeach fund should make use of local service provider due to confidentialityproviders. “We prefer relevant services to be and high service levels.”provided by people in Cayman,” he says. “Youneed an appropriate amount of infrastructure Darren Stainrod, UBSto support more than 10,000 Cayman-domiciledfunds, and we think it’s good for service international financial centre in a dominantproviders to be actually resident in Cayman position, which Cayman is.and an active part of the regulatory model.” “Whenever laws or regulations change, Nevertheless, Stainrod says that some it’s people that transact business, andCayman administrators have adapted to Cayman is uniquely well positioned. The lawcapacity issues by outsourcing some firms, administrators and auditors here arefunctions to operations in other jurisdictions, all part of international networks. The auditalthough the jurisdiction remains the focus firms here are all plugged into their Northof the services UBS provides to clients. “The American counterparts, US onshore andtrend over the past few years has been to offshore auditing goes on all the time, andmove certain processes to onshore or lower- our banks are subsidiaries or branches ofcost jurisdictions,” he says. “For example, onshore institutions with global reach.many have moved the NAV accounting and “The world has shrunk, and Cayman isportfolio valuation to Canada, with corporate on the main grid. This could be a goodand shareholder services staying in Cayman. opportunity for us. Things like the Dodd- “The migration of administration processes Frank Act in the US often wind up withmade sense during the period from 2005 to unintended consequences, but very few have2007 when the industry was booming and the agility and the wit to understand what theCayman was running up against the limits of market wants and give it to them within theits capacity. Our business has a workforce requirements of an interconnected financialin the hundreds, but the infrastructure in regulatory system.”Cayman would not be able to cope with Cockhill insists that he and his colleaguesoperations employing thousands of people. are bullish today in a way that they weren’tThere are also cost issues.” 12 months ago. “The storm clouds have However, Stainrod says the jurisdiction come, threatened us and now seem tohas certain advantages, such as offering an be passing, although I’m not complacent,”attractive living and working environment he says. “There are always challengesthat helps firms to recruit well-qualified staff. ahead, especially with France holding theHe points to the establishment in Cayman presidency of the G20, so I’m sure there willof new administration firms as evidence be more anti-offshore rhetoric.that it remains an attractive and competitive “However, I do think the world has becomebusiness environment. “Certain processes a lot better informed. International taxsuit Cayman, such as funds of funds, share information exchange agreements are a veryregistry and corporate services, and some good thing because more than anything elseclients prefer working with a service provider gives the lie to the notion that financial centreshere due to confidentiality and high service such as Cayman are in some way obstructinglevels,” he says. the needs of the onshore economies. Cockhill acknowledges that the business “We’ve been making information onenvironment in which Cayman operates has individuals with money in Cayman availablechanged over the past few years, but he is under the EU Taxation of Savings Directiveconfident that the jurisdiction will continue to for six years, a completely transparentthrive. “We’ve heard lots of stories about how mechanism that assures European countriesthe world is going to be more prescriptive that their tax laws are not being flouted. Todayand restrictive, but there are opportunities we are competing on a true argument ratherin every evolution,” he says. “There are than a mischaracterisation, and in the futuredefinitely opportunities for a well-regulated that will be very much to our advantage.” nCAYMAN ISLANDS Hedgeweek Special Report Jan 2011 | 23