Cayman to introduce new opt-in AIFMD Regime

| 15/07/2015 | 0 Comments

Cayman News Service(CNS Business:) The Cayman Islands Government is setting up new regimes that will allow managers to opt-in to reporting consistent with the European AIFMD requirements. On Friday two draft bills were published which make certain amendments to the Mutual Funds Law (MFL) and Securities Investment Business Law (SIBL).The bills are designed to put in place two separate opt-in regimes for prudential regulation of both EU-connected funds and EU connected managers which are consistent with the Alternative Investment Fund Managers Directive (AIFMD). The AIFMD Regimes will give Cayman Islands based funds and managers the option of electing for an additional layer of regulation to apply where certain types of marketing in the EU, or managing of EU funds, or depositary activity is contemplated.

The AIFMD Regimes, combined with the long-standing reciprocity of access for EU funds and managers to investors in the Cayman Islands, will put Cayman in an excellent position to secure an extension of the AIFMD passport to the Cayman Islands. This will be of particular interest to those seeking to market Cayman funds in the EU whether using existing national private placement regimes (NPPR) or, once extension to Cayman is approved, the AIFMD passport mechanism.

On 22 July, the European Securities Markets Authority (ESMA) is due to provide its initial recommendation to the European Commission (EC) as to which jurisdictions should be considered for a “third country passport” under AIFMD.

ESMA has decided to take a “country by country” approach to such recommendations to the EC. Whether to grant any actual extension of the passport to any country will be determined separately by the EC who have 3 months from 22 July to reach a decision on the countries recommended on 22 July.

Under the AIFMD Regimes both open ended and closed ended EU Connected Funds will be able to elect to be regulated by CIMA, but under a new regime tailored to EU Connected Funds, and EU Connected Managers will be able to elect, despite being “excluded persons” under SIBL, to become fully licensed under SIBL and in addition to be governed by new regulatory standards which are consistent with AIFMD.

Both of the Bills make clear that the existing supervisory duties and powers of CIMA under the MFL and SIBL will extend to EU Connected Funds and EU Connected Managers which opt in to the AIFMD Regimes.

“Permitting extension of the passport to the Cayman Islands would be of significant benefit to EU investors, providing them with access to world-class investment options across a diverse range of different investment products and strategies. Given this dynamic, Cayman Finance believes that there is a compelling case for ESMA and the EC to properly and promptly consider extension of the AIFMD passport to the Cayman Islands,” Cayman Finance officials stated in a press release.

Cayman Finance CEO Jude Scott stated, “The Cayman Islands Government, the Cayman Islands Monetary Authority and the Cayman Islands financial services industry all recognize Cayman’s important role in the global investment funds market, and these new AIFMD Regimes are the latest example of the jurisdiction continuing to evolve its legislation and regulation in a balanced and robust manner to meet the needs of investors and managers around the world.”

It is anticipated that the bills will be passed into law in August 2015.

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Category: Finance, Financial Services, Law

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