Funds code up for public input

The Financial Services Commission has released for consultation a draft funds code that will regulate how public funds are established and operated in the territory.

The 50-page code, which is being drafted pursuant to the recently passed Securities and Investment Business Act, 2010 (SIBA), sets out rules for corporate governance, valuation and pricing, record-keeping and disclosure to investors.

Speaking Tuesday, Robert Briant, managing partner at Conyers, Dill and Pearman (BVI), said the draft code would benefit the territory’s regulatory regime. “While we have a handful of minor comments … it’s regulation where regulation is appropriate,” Mr. Briant said.

Currently, the territory regulates around 216 licensed public funds, according to the most recent FSC statistics, which show that new licences issued to public funds dropped 68 percent, from 19 in 2008 to six last year.

According to Mr. Briant, the industry has seen increased barriers to entry for managers trying to get into the hedge fund arena, a result of investor wariness and scrutiny of the fund product.

“We are seeing a slow recovery to the economy,” he said. “It is still stops and starts, but we are seeing a renewed interest in funds, but not a great interest as yet.”

Meanwhile, Guernsey Finance reported that the island’s fund industry showed 7.2 percent growth during the first three months of this year. Guernsey-domiciled open-ended funds reached a net asset value of $83.3 billion at the end of March, a 10.7 percent rise during the quarter and an increase of 6.9 percent year on year, according to the organisation. The closed-ended sector, valued at $137 billion by the end of March, was up 8.1 percent during the first three months of 2010 and rose 11.9 percent year on year.

“Our funds industry is proving robust throughout these challenging times, and this quarter of growth at the start of the year strikes a further positive note. It is another step down a long road to recovery that I can see continuing slowly but surely through 2010,” said Peter Niven, chief executive of Guernsey Finance.

Nearby Jersey’s financial services industry also reported a positive start to 2010, as the net value of funds under administration increased 8.6 percent during the first quarter this year, from $245.9 billion to $266.6 billion. The total number of domiciled funds in the Crown dependency also increased by 26, to 1,320.

Geoff Cook, chief executive of Jersey Finance, said low interest rates and growing consumer and business confidence helped sustain the economic recovery, but he cautioned that governments worldwide face the challenge of tightening their fiscal policies without impeding growth.

“This is the first quarter, and it is too early to distil any trend from these figures while the markets are still volatile,” he said.


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