February 2012

ASSOCIATION COLUMN: Flexibility is key

Darren-StainrodDarren Stainrod, the chairman of the Cayman Islands Fund Administrators Association, tells us why Cayman countries are so attractive to global funds administrators. Most of the heavy lifting for hedge fund administration and middle-office services is now performed out of lower cost locations. This flexibility is part of the attraction of the Cayman product and is an advantage for large global administrators that can leverage their operations elsewhere. The quality of technology available today means the actual physical location of the people has become less important. In addition, the increased demand for daily reporting means that most providers need to arbitrage different time zones in order to meet aggressive deadlines. Certain processes such as shareholder and corporate services are still widely performed on the island and there will always be a percentage of clients that prefer to have the entire process administered in Cayman. It has never been a problem to attract key talent from all over the world, ensuring that service levels remain high. This has been another factor that has helped Cayman to retain a reasonable share of the fund administration. Despite the increased competition from other jurisdictions, Cayman continues to be a top choice for hedge funds. The advantages are well documented and include the quality of legal counsel and other service providers, balanced legislation that allows speed to market and flexibility in trading strategy while providing strong protection for investors within a robust anti-money laundering framework. The current number of funds regulated in Cayman stands at just under 10,000. This is slightly below its pre-crisis peak, but still the leading player by some distance. There are an increasing number of alternative jurisdictions and products, but there have only been a handful of funds that have re-domiciled or re-structured. Managed accounts, Ucits and other products may have taken some assets away from Cayman hedge funds but they have mostly complemented rather than competed with the Cayman product. We will face another test once the Alternative Investment Fund Managers (Aifm) directive comes into play in July 2013. The softening of the private placement rules, however, should avoid any major impact. In addition, Cayman is well positioned to meet the third country requirements of the Aifm directive as it has signed a significant number of tax agreement treaties, and has one of the strongest anti-money laundering regimes in the world. This has been confirmed by the Organisation for Economic Co-Operation and Development. It has also recently upgraded the mutual fund law to include the regulation of master funds.  The Cayman Islands Fund Administrators Association provides a common forum for administrators on the island to discuss issues that affect the industry locally as well as globally. It plays also an important role in collaborating with the Cayman government and the Cayman Islands Monetary Authority. It provides feedback on draft legislation and regulations such as the recent change in the mutual fund law to add the Registration of Master Funds and the content of the related MF4 Form. The association also runs training programs on the hedge fund industry in Cayman as well as providing financial assistance to the local university for its academic chair in accounting. Once all that work is done we are also known for throwing the occasional social and networking event. ©2012 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.