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Magazine Issues » October 2021

Jersey roundtable: The resilience factor

Funds Europe – Do panellists agree with the idea that investors will not give up returns for sustainable strategies to be met?

Honeywood – I most probably sit in the same camp as Alan, but equally there are some really interesting innovations, not necessarily all sitting here in Jersey, but that exist in the wider investment management landscape that could perhaps really challenge that concept.

Refson – If you look at the forecast that Bloomberg, PwC, Deutsche Bank have made, they’re talking about it being a 100,000 trillion industry by 2028. If that is going to be the case, then sustainable finance has to permeate every area of investments. At the moment, we’re talking here about closed-ended funds, and that’s clearly the Jersey focus. But aside from that, there are already areas of the sustainable finance market that are outperforming conventional investments. It’s worth noting that.

Funds Europe – The government last year approved a new amendment to legislation that will make it easier for fund managers to migrate limited partnership fund structures, which are frequently used for alternative fund structuring. What impact do you think that has had so far? And what’s next in terms of new legislation in Jersey?

Cruickshank – The move aligns Jersey with the laws of other jurisdictions by formalising a continuance pathway for non-Jersey LPs wishing to continue into the jurisdiction. This means that LPs can migrate their fund structures seamlessly and more efficiently than before.

With regulations changing frequently across jurisdictions and with many struggling to keep up with the flow of change, having the opportunity to migrate a fund structure to Jersey – which is tailor-made for hosting investment structures – will undoubtedly increase interest in the jurisdiction from alternative fund managers wanting to restructure their funds.

For many of the foreign LPs that migrate to Jersey and continue as an investment fund, they are likely to seek approval to become JPFs and utilise the JPF regime’s flexible, lower-cost and lightly regulated solution for firms launching funds targeting under 50 investors.

Jersey will continue to evolve as necessary to ensure that it remains competitive on the global landscape. Close collaboration between industry and the government means it will continue to act quickly when opportunities are identified. In this ever-changing landscape, we should expect to see further legislative changes that will enhance Jersey’s standing as a compelling jurisdiction for fund domiciliation.

Refson – One of the great benefits of Jersey is the collaborative approach between industry, government and the regulator who have worked very closely together to innovate and to address international standards in a very respected regulatory framework. Because we can move quite quickly, are quite nimble and we all face in the same direction, there are things that we can do to be opportunistic.

As to what’s next, the natural extension of that specific issue is the introduction in Jersey of Limited Liability Companies (LLC) laws, to face off to US managers. We at Jersey Finance opened our US office two years ago and we have very capable representation there with Philip Pirecki. He’s had 600 meetings over the past few years where he’s gone round and said, ‘Hi, I’m representing Jersey,’ and the initial response is ‘New Jersey?’ But the point is he’s got over that issue now, so for those 600-odd people he’s met, when we release the LLC laws at the end of the year, we can go back to all of them and say, ‘Our laws in Jersey now reflect the laws that you are totally familiar with.’ That’s what industry, government and regulator being joined-up means, and that’s where we as a jurisdiction can innovate and can lead the way.

Macleod – We were fortunate enough to act on the first migration from Cayman into Jersey following the amendment to the legislation and we continue to see some interest.

Whilst we may not see a deluge of migrations, I think the changes to the legislation will make some managers who have used Cayman for previous funds be happier to use Jersey for future funds, safe in the knowledge that they now have a mechanism to move the older funds should they wish to do so. I’ve no doubt that before the change in legislation, there were some managers who felt compelled to continue to use Cayman because there was no mechanism to migrate existing funds.

Honeywood – What Jersey needs to keep doing is innovating, because the global funds market is becoming increasingly complex. Structuring is becoming more nuanced and there isn’t necessarily a one-size-fits-all any longer. So, the more strings there are to the Jersey bow, the better service those individuals, investors and managers that use Jersey will get, and the more compelling the offering is for any new entrants.

Baird – It’s one thing having the kit, it’s another thing communicating it to the wider world, and that used to involve jumping on planes a lot of the time to get to meetings with lawyers and intermediaries in the fund admin space. That’s all changed with the ability to do this [webcast], for example. I agree there’s not going to be necessarily a deluge of these things, but the more we build on the fact that we’ve got certain instances and case studies proving why it’s good, the more compelling it becomes.

Taylor – This is a useful marketing tool for Jersey. Legislation is generally done for two reasons: to make us more robust and, secondly, to create opportunity in the market. The more we can do with our legislation, the better we’ll see Jersey’s funds industry develop.