Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
HedgeCo.net (West Palm Beach) – A study by Dennis S. Ryan and Sonia Xavier of offshore law specialist, Conyers Dill & Pearman has come out ‘Cayman Islands Funds – Entering the Gateway to Capital Markets in India.’ The team describes the history and challenges of what Cayman Islands domiciled investment funds have faced when seeking to invest into Indian capital markets.
One of the major hurdles in this regard has been addressed by the 10 June 2009 admission of the Cayman Islands Monetary Authority (CIMA) as an ordinary (i.e., full) member of the International Organization of Securities Commissions (IOSCO), according to the report.
By way of background, the IOSCO Objectives and Principles of Securities Regulation were endorsed by its member regulators of various securities and futures markets in 1998, and generally are viewed by securities regulators as the key international benchmark on sound principles and practices for securities regulation. Currently, IOSCO members regulate the vast majority of the world’s securities markets.
To access the Indian markets, an investment fund must register as a Foreign Institutional Investor (FII) with The Securities and Exchange Board of India (SEBI). In the past, since CIMA was not a member of IOSCO, SEBI often engaged in extensive due diligence and inquiries before allowing registration of a Cayman fund as a FII. As a result, few Cayman Islands funds have registered with SEBI. CIMA’s admission to IOSCO looks set to change this trend in favour of Cayman Islands funds.
The timing could not be better, the report says, with emerging markets competing to attract liquidity, the Cayman Islands, with over 9,000 CIMA registered investment funds, a proven track record with investors and an excellent and sophisticated service infrastructure, has a great deal to offer India and investors that wish to access its markets.
One remaining challenge is that the Cayman Islands do not currently have a tax treaty with India, the law fim asid. Mauritius, on the other hand, has long been the preferred jurisdiction for investment into India as a consequence of the favourable double taxation agreement between those countries (the Mauritius-India DTAA), contributing to around 44% of foreign direct investment (FDI) into India.
Investment funds from non-tax treaty jurisdictions have developed a structure involving a wholly owned Mauritius subsidiary for purposes of Indian investment. Typically, this structure requires a Cayman Islands (or other non-treaty jurisdiction) investment fund to register with SEBI as a FII. The Mauritius subsidiary fund will then be registered with SEBI as a sub-account of the FII, permitting it to invest directly in Indian securities via SEBI.
The Mauritius fund will be set up as a Global Business Company Category 1 (GBC1) that is resident in Mauritius for tax purposes. As a Mauritius tax resident, this fund is subject to tax on income at the flat rate of 15%. However it is entitled to claim a credit for foreign tax on income not derived from Mauritius against the Mauritius tax payable, resulting in an effective tax rate generally ranging between 3% and nil. As a tax resident GBC1, the fund is also entitled to take advantage of Mauritius’ network of tax treaties, including the Mauritius-India DTAA, the report concluded.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Reuters – A global regulatory body backed compulsory registration of hedge fund managers on Monday to restore investor confidence, saying the $1.3 trillion sector did not cause the credit crunch but may have amplified its effects.
The International Organization of Securities Commissions (IOSCO) represents regulators from over 100 countries, including the United States, Japan and the 27-nation EU.
Its final principles flesh out a statement made in March and a pledge from the G20 group of industrialized and emerging market countries in April that all hedge fund managers should be registered and directly supervised.
West Palm Beach (HedgeCo.net) – Global hedge fund industry group, The Alternative Investment Management Association (AIMA), has welcomed the principles for hedge fund regulation published by the International Organization of Securities Commissions (IOSCO) today.
“We are very happy to welcome the publication of this report today because AIMA has already announced its support for several of the high level principles mentioned in it." Andrew Baker, AIMA CEO, said, “In our new policy platform of 24th February, we said that we supported global registration for managers and we are glad that IOSCO has also come out in favour of this.
“We also expressed our support for the reporting of systemically relevant information by managers of large hedge funds to their national regulators, and this is another one of IOSCO’s key principles.
“We are also delighted that IOSCO refers to the ‘development, implementation and convergence of industry good practices’ because AIMA has been extremely active in this area and is continuing a great deal of work on it with the other groups involved. We are following up on a G20 action point in this respect," he continued.
In a note of caution, however, Baker said, "We would stress that it is hedge fund managers, rather than the funds themselves, that should registered. It is also mentioned that hedge funds use derivatives for speculative purposes without stating that exchange-traded and over-the-counter derivatives are principally used by the relevant market participants for risk management purposes."
“Finally, we are concerned that these recommendations may lead regulators to seek quantity rather than quality of data. It is important that regulators have the expertise and resources to deal with the data they receive.”
AIMA has more than 1,100 corporate members worldwide, based in 40 countries, including hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
New York Times Blogs – The compulsory registration of hedge fund managers was backed by a global regulatory body on Monday in an effort to restore investor confidence.
The International Organization of Securities Commissions, representing regulators from more than 100 countries, said the $1.3 trillion hedge fund sector did not cause the credit crunch but may have amplified its effects.
IOSCO’s final six principles flesh out a statement made in March, and a pledge from the G20 group of industrialized and emerging market countries in April, that all hedge fund managers should be registered and directly supervised, Reuters reported. Those principles include mandatory registration of hedge fund managers while prime brokers who provide funding to hedge funds should also be subject to mandatory registration and supervision.
The European Union has also put forward a draft law that goes further than IOSCO, while the U.S. is also planning mandatory registration of hedge funds but so far in a less extensive way than the EU.
West Palm Beach (HedgeCo.net) – The Cayman Islands Monetary Authority (CIMA) was formally admitted as the 189th member of the International Organization of Securities Commissions (IOSCO) at the meeting of the Presidents’ Committee at IOSCO’s 34th Annual Conference in Tel Aviv, Israel.
With the admittance, CIMA also officially becomes a party to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information. CIMA signed the MMOU, which is the benchmark for international cooperation among securities regulators, on 24 March 2009.
"Some countries either do not allow investment vehicles from non-IOSCO member countries to be sold in their jurisdictions or will require greatly enhanced due diligence which makes it more difficult to do business with those jurisdictions." CIMA’s Deputy Managing Director, Mr. Langston Sibblies said, "IOSCO membership will remove these impediments and open up these markets for Cayman-domiciled securities providers. This is a development our private sector has looked forward to for a long time. It will be welcomed by the private sector."
IOSCO is the principal global standard setting body for the regulation of securities markets. Its objectives encompass cooperation and information exchange, standard setting and surveillance, and mutual assistance.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
West Palm Beach (HedgeCo.net) – The organizing committee of The International Organization of Securities Commissions (IOSCO) is to host more than 500 of the leading securities regulators and economic experts from more than 65 countries at this year’s conference in Tel Aviv, Israel, June 8-11.
"We are honored to host the world’s leading regulatory experts, from Albania to Zambia, in Israel for this important event," said Spokeswoman Yael Almog. "Israel ‘s sophisticated local market regulation and high levels of investor protection make it a great setting for this historical event. We believe that IOSCO 2009 will not only help restore strength in the world’s regulatory system, but more importantly, it will foster renewed confidence among the international investment community."
Conference participants include SEC Chairwoman Mary Schapiro, Goldman Sachs CEO Lloyd Blankfein, S&P President Deven Sharma and UK FSA Chairman Lord Adair Turner and Mario Draghi, Governor of Banca d’talia and Chairman of the Financial Stability Forum.
The conference provides the opportunity, IOSCO said, for regulators from both emerging and developed markets to address the global effects of the financial crisis on the financial and securities system and the stability of the world economy. In addition, it will emphasize the role emerging markets will play in the global recovery process and will outline the need and importance for new partnerships between developed and developing markets.
The conference will be hosted by the Israel Securities Authority (ISA) and the Tel Aviv Stock Exchange (TASE).
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
