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JFA News
Thursday
17
November 2016

IFCs and the fund management landscape: a Q&A with Geoff Cook

This Q&A was first published in Real Deals on 17 November 2016.

Jersey Finance’s chief executive Geoff Cook explains how the fund management industry is evolving and what international financial centres (IFCs) should be doing to meet the industry’s changing needs.

From the perspective of someone involved in running an international financial centre (IFC), how do you see the fund management environment changing?

GC: The OECD’s base erosion profit shifting (BEPS) initiative has changed the tax landscape and substance has become very important. Where a fund is based is becoming less of a technical question and more a question of substance. A fund needs to show that it has offices and ‘boots on the ground’ to conduct the business of the fund. A physical presence is important.


Where do these trends leave Jersey as a jurisdiction?

GC: After Brexit and the ongoing developments around BEPS Jersey is in a good position. With regards to Brexit, there is no change to Jersey’s status, as it has bilateral treaties in place with EU member states so there is no need to seek re-approval or renegotiate access. There is certainty for fund managers.

On the BEPS initiative, Jersey is strong on the substance point. There are more than 13,000 people working in the finance sector, more than a fifth of total employment in the Island, and Jersey has one of the largest number of finance industry professionals of any IFC.

The fund administration and legal sectors are strong and well-equipped to service the needs of fund managers. We have more than 2,000 people working in fund management and legal services alone and that number is growing. There is a new waterfront development with accommodation and office space, so the infrastructure is place to support further expansion.


To what extent do these factors influence how managers decide where to domicile their funds?

GC: Substance and certainty are crucial. There are other important hallmarks for fund managers too. Political and tax stability is a big factor. We are lucky to have a steady parliament and a tax system that has not changed a great deal since 1945. Jersey is tax neutral for funds and offers competitive personal tax rates for professionals who want to work here. A robust and appropriate regulatory environment is also key, and we have shown that our system works and is proportionate.

Jersey offers a platform that is stable and open. It is governed by English Common Law and is close to London. Finally, as a well-regulated and credible IFC, Jersey offers good access to markets around the world through its private placement regime.

All of these elements are important for managers deciding where they should domicile their funds.


Has the fact that the Panama Papers have cast the spotlight on how IFCs operate, and that the BEPS program is building momentum, prompted managers to take a step back, reevaluate the jurisdictions they use and possibly relocate?

GC: I think that is a fair assumption. If you are a fund manager you have to look at this and make sure you are comfortable with the jurisdictions you are using. There has been a lot of relocation and managers have been moving to IFCs that are stable, well-regulated and are in good standing with tax authorities.

Following the financial crisis Jersey appointed McKinsey to look into the risks facing Jersey’s financial services industry, so the Island has been addressing these questions for a long time now and has developed a clear strategy to address fund manager needs Managers have taken note and Jersey has enjoyed solid growth in the number of alternative asset managers using the jurisdiction.

The NAV of assets under administration for Jersey’s fund industry climbed to £228.4bn in the first quarter of 2016, the second highest level since 2008. Private equity, which was up by 10 per cent a year, and real estate, up 20 percent annually, underpinned this strong performance. Jersey is also now the sixth largest center for hedge funds.

The private placement regime is clearly as popular as ever, offering managers stability and certainty.

We are confident that we have put a very strong platform in place, but we are not complacent and always looking at ways to ensure that our proposition is strong.

Jersey Finance’s chief executive Geoff Cook explains how the fund management industry is evolving and what international financial centres (IFCs) should be doing to meet the industry’s changing needs.

JFA News
Thursday
3
November 2016

Evolving to meet PE needs: a Q&A with Geoff Cook

This Q&A was first published in Real Deals on 3 November 2016.

Jersey Finance’s chief executive explains how offshore jurisdictions are evolving to meet private equity’s needs, why Jersey’s relationship with the EU is important for its future and what measures the island has in place to address tax concerns.

The private equity industry has grown up a huge amount over the last ten years. How has that changed what managers expect, and how has Jersey evolved to meet these needs?

GC: The industry is more sophisticated and more international. Managers want to domicile their funds in jurisdictions that can service their needs effectively and serve as a global platform for raising and investing capital around the world.

We have taken a number steps in response to these shifts. We are building more substance in Jersey and the ecosystem of advisers and services has grown strongly. We have the infrastructure and wherewithal in the Island to guide managers through things like base erosion and profit shifting (BEPS) and ESMA (European Securities and Markets Authority) regulations. This is underscored by the growth in employment in financial services in Jersey, which is nearing an all-time high. The industry added more than 800 new jobs in 2015 and 2014, net of any reduction. This helps fund managers because they can demonstrate that there is genuine substance to their activities in Jersey.

Since 2008 we have also grown internationally and pushed out into Hong Kong, Dubai and Mumbai. We are visiting these cities regularly and there has been an increase in the number of private equity groups using Jersey as a base to raise money from, and invest in, emerging markets.


Following on from that, what does the future hold for offshore financial centres following the release of the Panama Papers and the focus that governments and the OECD are placing on cracking down on tax evasion and avoidance?

GC: The Panama Papers added to the global public pressure for all jurisdictions to improve their regulatory systems, but it was a process that was already underway, and which Jersey had been engaged in for a long time.

A seminal point in this debate was 1998, when the sanctions for tax evasion changed from civil to criminal. The consequences for evasion are serious and can see a result in a prison sentence of up to 15 years. The deterrents have become significantly stronger.

Jersey took a big step in 2002 when it reached an agreement with the OECD to exchange information on tax matters. Jersey is also compliant with the Foreign Account Tax Compliance Act (FATCA) in the US, has signed up an Inter-Governmental Agreement (IGA) with the UK and was an early adopter of the OECD’s Common Reporting Standard (CRS).

What this means is that Jersey financial institutions have to send information held on their clients to Jersey authorities, who share this with the relevant revenue authorities around the world. Transparency is automatic.


A related issue is the question of beneficial ownership of companies registered offshore. How has Jersey addressed this issue?

GC: The Panama Papers have certainly magnified these issues and questioned whether offshore centers know who they are doing business with. Jersey has a longstanding central register of beneficial ownership information and is experienced in collecting, verifying and holding beneficial ownership information on all Jersey companies.

Some jurisdictions have been slower than others to make progress in this regard, but it is becoming increasingly important to demonstrate that your center is not a harbour for bad business.


Why is a robust regulatory and information sharing framework so important for Jersey’s relationship with key markets like the European Union?

GC: A good relationship with the EU is crucial for Jersey, and in order to do business the island has to show that it meets the very highest transparency and regulatory standards.

An example of illustrating how seriously Jersey takes these obligations is a report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, which reviewed Jersey’s institutional, legislative and regulatory framework and found that, of the 49 areas they assessed, Jersey was rated compliant or largely compliant in 48, placing us in the top tier of jurisdictions assessed under those criteria.

Meeting regulatory requirements puts Jersey on a very strong footing when it comes to doing business with the EU. When governance is strong and a strong regulatory and legal regime is in place, managers can base themselves in a jurisdiction and raise money with confidence.

Jersey Finance’s chief executive explains how offshore jurisdictions are evolving to meet private equity’s needs, why Jersey’s relationship with the EU is important for its future and what measures the island has in place to address tax concerns.

JFA News
Thursday
20
October 2016

Jersey and Brexit: a Q&A with Geoff Cook

This Q&A was first published in Real Deals on 20th October 2016.

The head of Jersey Finance discusses what the UK’s vote to Brexit means for Jersey, the long-term future of the private placement regime and the why the outcome of a recent ESMA review is good news for the jurisdiction.

The UK’s vote to leave the European Union caught many in the financial services industry by surprise and created much economic uncertainty. What does the referendum mean for Jersey and its access to the EU?

GC: The fact of the matter is that the vote doesn’t impact Jersey directly at all. There is often a mistaken assumption that Jersey accesses the EU through the UK. Jersey’s access to Europe is not secured through a UK treaty but through bilateral treaties with individual member states or by being deemed to be ‘equivalent’ for specific initiatives. There is cooperation with regulators across Europe and we have equivalent standards in place.

Even though the Brexit vote will not restrict Jersey’s access to the EU, could the referendum have any indirect consequences?

GC: We want Britain to negotiate a successful agreement with Europe as a large number of the investment managers that use Jersey are based in the UK. In some respects you could say that after the referendum Jersey is in a position that that UK will need to get to, so we have been contributing to the regulatory work streams that have been set up in the UK to look into passporting post-Brexit and how the UK can operate as a third country.

Going back to the point you mentioned earlier about the equivalent regulatory standards Jersey shares with the EU, the jurisdiction has recently undergone a review by the European Securities and Markets Authority (ESMA), the EU body that supervises funds activity. What was the outcome of that review and what is its significance?

GC: ESMA provides a pan-European overlay to the bilateral agreements that Jersey has in place and in July it announced that Jersey was one of only five non-EU jurisdictions to have “no significant obstacles” impeding the application of the AIFMD passport. This reinforced ESMA’s initial advice of July 2015 recommending that Jersey should be granted an AIFMD passport.

What this demonstrates is that Jersey’s standards have passed muster. Jersey has transparency checks and balances in place and shares information with regulators and tax authorities globally. Its standards for the prevention of aiding and abetting crime and tax evasion are as, if not more, robust than those in the EU. Jersey engaged with AIFMD early and was the first third country with equivalence selected by ESMA for assessment. In terms of the significance of this, it shows that Jersey is in a very strong position having set up an AIFMD equivalent regime early on.

What does it mean for fund managers?

GC: It means that fund managers can take a lot of confidence in the Jersey platform. It offers a straightforward regulatory regime and the confidence of continued access to the European market, whether that be through private placement or, in time, the passport. The regime also provides a framework for conducting funds activity outside Europe. That flexibility makes the jurisdiction very attractive for fund managers, which is reflected in the growth in the number of fund promoters using Jersey. The number of Jersey-based fund promoters has almost doubled during the last five years. At the end of June 2016, there were 134 Jersey-based fund managers, up fiver per cent annually.

What about the future of private placement? In the long-term will it eventually be overtaken by the passport?

GC: There has been a great deal of conjecture that private placement will be superceded by the passport and phased out, but figures suggest that appetite for private placement is as strong as ever.

At the end of June this year, 115 alternative investment fund managers had been authorised in Jersey to market into Europe through national private placement regimes, up 11 per cent when compared to the period to the end of December 2015. During the same period the number of Jersey alternative investment funds marketed into Europe through national private placement regimes was 9 per cent higher at 251.

Managers do find national private placement appealing and continue to use it. This, and potential for an AIFMD passport in the future, gives managers real confidence in Jersey’s long-term future as a jurisdiction to domicile a fund.

The head of Jersey Finance discusses what the UK’s vote to Brexit means for Jersey, the long-term future of the private placement regime and the why the outcome of a recent ESMA review is good news for the jurisdiction.

JFA News
Thursday
20
October 2016

Jersey Named Best IFC at Fund Awards

Jersey has been named ‘Best International Finance Centre’ at the International Fund & Product Awards in London.

Held at the prestigious Four Seasons, Park Lane, London on Wednesday 12 October, the awards recognise and celebrate excellence across the industry, including asset managers, life companies, private banks, discretionary fund managers and wealth managers and distribute financial products and services internationally.

Jersey’s credentials as one of the world’s leading international finance centres were once again underlined, as the island was selected by the panel of judges above other shortlisted jurisdictions, including Isle of Man and Malta.

The awards, now in their 17th year, also marked a return to centre stage of the global financial services industry by international investment, who hosted the event. This year’s awards also saw a record number of submissions, as well as attendees on the evening.

Geoff Cook, CEO of Jersey Finance said “Jersey’s recognition in these awards further reflects the Island’s consistent ability to adapt and evolve through a rapidly shifting global financial landscape. We are delighted to receive this award and would like to thank the judges and our business partners for their help in positioning Jersey as the gold standard in international finance centres.”

Nick Rapley, Chief Executive at Open Door Media Publishing, said: “Like these awards, International Investment exists to champion all that is good about the industry. We like to make heroes of those product providers and advisers who demonstrate best practice, who seek to raise standards and who put their customers first.”

Jersey has been named ‘Best International Finance Centre’ at the International Fund & Product Awards in London.

JFA News
Monday
5
September 2016

Enhancing the Framework

This article was first published in the PERE Fund Services Guide 2016.

As more capital moves across borders the structuring of funds and investments is becoming more complex. Fortunately, real estate's fund services industry is meeting managers' ever-increasing demands, says Geoff Cook, chief executive of Jersey Finance.

In the alternative investments world, global trends such as the shift in wealth towards Asia Pacific and the increase in cross-border investment flows are driving the demand for sophisticated investment support, with estimates from PwC indicating that the global asset management industry will grow to more than $100 trillion within the next five years.

With this comes a greater interest in property investment. Institutional and private investors in markets now stretching from the US to the Middle East and Africa to Asia are seeking efficient means of deploying investment capital into real estate funds, and fund managers in those markets are also looking to diversify their portfolios into non-domestic assets.

The Knight Frank Wealth Report 2016 notes that the general trend over the past decade has been for significant growth in cross-border investment, led by outflows from China (+1,471 percent), and certainly it is Jersey’s experience that Asian investors continue to be attracted to London property.

As such, international finance centers (IFCs) located in close proximity to the UK, such as Jersey, remain essential among Chinese, Malaysian and Singaporean private, institutional and sovereign wealth funds. There is a strong rationale for the appeal of IFCs. For instance, Jersey is independent yet has close connections with the UK and is a jurisdiction of substance, with the expertise of more than 13,000 professionals working in its finance industry and has a strong focus on high-end real estate and private equity funds business.

Yet the work of these real estate service providers is becoming more challenging as this increasingly global real estate investment continues apace. More than ever these cross-border investment flows require precise alternative fund structuring and servicing expertise, particularly against the backdrop of international regulatory change and the drive towards international standards. Fortunately, IFCs can provide the framework for the increased complexity caused by shifting capital across borders.

This is made possible by offering a comprehensive range of fund structuring options, including limited partnerships and separate limited partnerships which are commonly used for private equity deals. This is backed up by a range of regulatory regimes catering to a full spectrum of investor types, including the well-used expert and private fund regimes, tailored for the needs of professional and institutional investors.

This regulatory environment, however, needs to be underpinned by an infrastructure of high quality, experienced service providers, including major offshore law firms, accountancy firms, administrators, depositaries and custodians, as well as an impressive pool of non-executive directors to bolster corporate governance credentials.

For Jersey this infrastructure has formed the bedrock of a growing fund management community, underlining Jersey’s commitment to demonstrating fund management substance – a vital concept under the OECD's Base Erosion and Profit Shifting (BEPS) initiative.

Entering Europe

Looking at continental Europe the same theme applies, with more global capital wanting to get into the region's property markets. Yet since the advent of the pan-European fund management regulation, the Alternative Investment Fund Managers Directive (AIFMD), this has become more difficult.

This is because until non-EU fund managers can opt into the AIFMD they must navigate a patchwork regulatory environment requiring a country-by-country analysis of the new marketing rules in each EU jurisdiction. Additionally, some nations have gone above and beyond what the AIFMD requires when updating their local marketing rules, creating even more burdensome regimes for non-EU managers.

As such the world's largest and most sophisticated fund managers require expertise and regulatory frameworks to efficiently structure both pan-European funds, through an ‘opt-in’ regime that is fully compliant with the AIFMD, and non-European funds through a ‘rest-of-the-world’ regime.

Jersey can offer this dual approach and provide globally-focused fund managers with the stability and flexibility they need to successfully market to investors both inside and outside the EU.
Within Europe, the AIFMD-compliant National Private Placement Regime (NPPR) option is giving non-EU private equity and real estate fund managers, including, increasingly, those based in the US or Asia, added flexibility in accessing the European investor market without the headache and costs of full onshore AIFMD ‘passporting’ compliance. This solid AIFMD structuring is a key driver behind Jersey’s funds growth, providing the right frameworks to offer Jersey funds to EU and non-EU investors.

Figures from the Jersey Financial Service Commission show that there are currently 115 Jersey fund managers and 251 Jersey funds with authorisation to actively market into the EU through the NPPR.

In July 2016, Jersey’s appeal as an IFC was further enhanced when the European Securities and Markets Authority (ESMA) reconfirmed Jersey as one of only five non-EU jurisdictions to have no obstacles at all in being able to apply for the full-EU wide AIFMD passport in due course. Whilst the authority’s announcement showed that satisfying ESMA’s criteria was not straightforward for all jurisdictions, it also emphasised that Jersey’s foresight in creating an AIFMD-equivalent regime some time ago had put it in a very strong place.

At the same time, an ability to offer a ‘rest–of-the-world’ regime completely outside the scope of the AIFMD but in a European time zone is proving popular for managers, meaning that Jersey is well set-up to cater to managers targeting, for instance, the rapidly growing Asian private equity and real estate fund market, or the African infrastructure sector.

This flexibility offered by IFCs is giving managers genuine confidence for the long-term. They appreciate the flexibility of accessing Europe through private placement or, in due course, the passport, as well as a regime for funds targeting non-EU based investors.

In a complex world where wealth patterns are driving demand for private equity and real estate investment expertise in all corners of the world, Jersey is well placed to provide robust cross-border investment platforms and demonstrate a mature response to regulatory change.

This is backed up by the numbers. The rate of fund formation in Jersey remains healthy, with more than 1,300 fund entities being serviced in the jurisdiction. Figures for the first quarter of 2016, collated by the Jersey Financial Services Commission, also show that the value of regulated funds being administered in Jersey has grown to $300.9 billion, the second highest figure since 2008. In particular, the real estate and private equity fund sectors reported strong numbers, with assets being serviced in Jersey growing by 20 percent and 10 percent year-on-year respectively.

The familiarity, flexibility and expertise that Jersey offers are proving highly attractive to both the manager and investor communities across not just the UK and Europe but also, increasingly, Asia, the US and Africa.

As more capital moves across borders the structuring of funds and investments is becoming more complex. Fortunately, real estate's fund services industry is meeting managers' ever-increasing demands, says Geoff Cook, chief executive of Jersey Finance.

JFA News
Thursday
4
August 2016

Jersey sees increase in private placement

The number of Jersey-registered alternative investment fund managers marketing into Europe through national private placement regimes (NPPRs) under the EU Alternative Investment Fund Managers Directive (AIFMD) continued to rise consistently over the first six months of 2016, according to figures from the Jersey Financial Services Commission (JFSC).

As at June 2016, 115 alternative investment fund managers (AIFMs) had been authorised in Jersey to market into Europe through NPPRs, up 11% compared to December 2015. Over the same period, the number of Jersey alternative investment funds (AIFs) being marketed into Europe through NPPR stood at 251, representing a 9% increase.

These figures come shortly after the European Securities and Markets Authority (ESMA) made its further recommendation, on 19 July, that Jersey should be amongst those ‘third countries’ granted an AIFMD passport.

In addition, the Government of Jersey and the JFSC launched a joint consultation this week aimed at enhancing Jersey’s funds regime. The consultation seeks to simplify and rationalise numerous aspects of Jersey’s funds environment, with the paper confirming the intention to introduce new products to the market.

These are anticipated to include a new manager-led Jersey registered alternative investment fund (JRAIF). The JRAIF will be supervised by the JFSC by proxy as it will be the relevant AIFM who will be responsible for ensuring the fund’s AIFMD compliance. The consultation also provides detail around a proposed new universal definition of a ‘Professional Investor’ and consolidation across certain fund types.

The latest figures for Jersey’s investment funds sector show that Jersey’s funds industry continues to grow, with the Net Asset Value of assets under administration rising to £228.4bn in the first quarter of 2016, the second highest level since 2008. This is being driven by alternative asset classes and in particular by strong performances in the private equity (up 10% annually) and real estate (up 20% annually) asset classes.

Geoff Cook, CEO, Jersey Finance, said:

“It’s clear that the alternative fund management community are continuing to find real appeal in the optionality and certainty of European market access Jersey is able to offer. The latest figures show that the appetite to use Jersey’s existing NPPR route is consistently strong amongst managers, whilst the potential for an AIFMD passport in the future is giving managers real confidence in Jersey’s long-term future as an alternative funds domicile.”

Mike Byrne, Chairman, Jersey Funds Association, added:

“As a jurisdiction, we recognise that we need to continue to enhance our funds environment in a new regulatory landscape and this latest consultation forms a significant part of that. As well as making Jersey’s regime clearer, simpler and more streamlined, it also demonstrates that the jurisdiction is committed to bringing innovative products, such as the manager-led registered fund product, to the market.”

The number of Jersey-registered alternative investment fund managers marketing into Europe through national private placement regimes (NPPRs) under the EU Alternative Investment Fund Managers Directive (AIFMD) continued to rise consistently over the first six months of 2016.

JFA News
Monday
25
July 2016

Opalesque Jersey Roundtable 2016

Jersey is currently the world’s sixth-largest hedge fund jurisdiction by AUM and it is continuing to grow. About 70% of the assets in the jurisdiction relate to alternatives.

From a population of about 100,000, over 13,000 people work in financial services across a broad range of disciplines, from professional services, tax, advisory, legal, through administration services, management, banking and fiduciary.

Read more about the evolution of Jersey's hedge fund sector in the 2016 Opalesque Jersey Roundtable.

Jersey is currently the world’s sixth-largest hedge fund jurisdiction by AUM and it is continuing to grow. About 70% of the assets in the jurisdiction relate to alternatives.

JFA News
Thursday
21
July 2016

Jersey funds industry in a strong position according to new association chairman

Jersey’s proactive approach to developing new funds legislation together with its commitment to enhancing links with overseas markets will ensure its funds industry can look forward to a positive future, according to Mike Byrne, the new Chairman of the Jersey Funds Association (JFA).

Elected into the position of Chairman at the recent AGM (1 July) of the trade association that represents Jersey’s funds industry, Mike, a partner at PwC Channel Islands, is joined by Tim Morgan, partner at Mourant Ozannes, who will serve a second term as Vice Chair.

Also on the updated committee are Nick Taylor (Ashburton Investments) who remains as Treasurer, Steve Cartwright (Crestbridge), Michael Johnson (BNP Paribas), Niamh Lalor (Ogier), Graeme McArthur (Crestbridge), Robert Milner (Carey Olsen), Daniel O'Connor (Carey Olsen), Martin Paul (Bedell), Andrew Pitter (Ipes), Vycki Price (State Street), Mark Rawlins (Collas Crill), Peter Rioda (Sanne Group), Steven Ross (Rawlinson & Hunter), Jenny Swan (JP Morgan Chase Bank), Gayle Swanson (Capita Asset Services), Nigel Weston (Walkers). Caroline Harrington will continue as Secretary.

Mike Byrne, who has been with PwC for over 15 years, leads the Asset Management industry for PwC in the Channel Islands, with a particular focus on private equity and hedge funds. He has significant experience in international work, particularly in Europe and Asia, and in 2014 returned to Jersey after a two-year secondment in Singapore where he led the firm's development of a range of services in the alternative fund space.

Mike has also been a regular contributor to Jersey Finance's funds sector promotional activity, including participating in Jersey Finance’s Asia Roadshows in Hong Kong, Kuala Lumpur and Singapore.

Following his election to the role of JFA Chairman, Mike said:

“It is certainly an interesting time to take over as Chairman of the Jersey Funds Association. Against the backdrop of some significant political and economic shifts in Europe and the US, I feel Jersey is in a strong position given its relative regulatory and political stability and certainty. The industry has been on the front foot in developing legislation to keep us ahead of the game, whilst we continue to be recognised globally as a jurisdiction of expertise, substance and world class regulatory standards.

“Across the alternative asset classes, Jersey continues to see real success, with real estate and private equity posting double digit year on year growth in the first quarter of this year and infrastructure, credit and debt funds emerging as key growth areas. As well as there now being in excess of 200 Jersey funds successfully marketing into Europe through private placement, Jersey is also growing its market share in structuring funds targeting assets and investors in other markets in Asia and Africa, and we have a burgeoning fund management community. Through the hard work of the industry, together with Jersey Finance and the regulator, these are all trends we expect to continue."

Figures for Jersey’s funds industry show that, in the first quarter of 2016, the net asset value of funds administered in Jersey rose to £228.4bn, the second highest level since 2008, alternative asset classes representing over 70% of that business.

Mike replaces former Chairman Ben Robins, who has been at the helm of the JFA for the last three years and was thanked at the AGM for his hard work on behalf of Jersey’s funds industry during a busy and challenging period. An active trade association representing companies with Jersey offices operating in the funds sector, the JFA has over 70 member firms, including organisations spanning from niche independent Jersey-owned companies to global leaders.

Jersey’s proactive approach to developing new funds legislation together with its commitment to enhancing links with overseas markets will ensure its funds industry can look forward to a positive future, according to Mike Byrne, the new Chairman of the Jersey Funds Association (JFA).

JFA News
Thursday
24
March 2016

Jersey funds industry focused on innovation

Jersey’s funds industry will need to embrace FinTech, assert its long-standing expertise and focus on innovation in order to remain at the forefront of a constantly evolving global funds landscape, according to the chairman of the Jersey Funds Association (JFA).

Speaking at this year’s annual JFA Dinner (18th March), Ben Robins told an audience of over 450 funds professionals, senior politicians and regulatory representatives that the recent performance of Jersey’s funds industry painted an extremely positive picture and positioned the jurisdiction well as a centre for alternative funds business.

Highlighting that the total value of funds business grew at the end of 2015 to reach £226bn, and that company formation activity was at its highest level since 2008, he pointed to rising levels of business across the well-established hedge, real estate and private equity asset classes, but also significant growth in emerging areas including debt, credit and infrastructure funds. Explaining that the industry globally faces a number of challenges, Ben said:

“Volatility, uncertainty, complexity, and ambiguity will be the key challenges facing those of us operating in the asset management sphere in 2016. In the worlds of regulation and tax transparency, the Base Erosion and Profit Shifting (BEPS) project progresses with surprising speed, AIFMD trundles on, the implementation of MiFID II has been postponed yet again to January 2018, and the Common Reporting Standard now looms large, adding significantly to the complex tax information sharing burden presented by FATCA.

“However, these are global asset management issues, not just issues impacting Jersey. In fact, 2015 was another year of very positive performance for our local funds industry. The net asset value of funds under administration in Jersey grew over the twelve months and by the end of the year 230 Jersey funds and 104 Jersey managers were actively marketing into the EEA under AIFMD private placement arrangements, a reflection of our strong European market access proposition.

“The inward migration of fund managers to Jersey is also an exciting growth trend, ably facilitated by Jersey Finance and Locate Jersey, with Jersey now in the top ten hedge fund management hubs globally. There are now 126 fund promoters operating in Jersey, a 113% increase in five years, so we are fast cementing our reputation as an asset management substance hub which is very helpful in these times of BEPS and AIFMD.

Looking at the year ahead, Ben suggested that the current direction of regulatory traffic and market developments could give Jersey some opportunities:

“We've done really well keeping pace with the shifting international norms and this year will give us an opportunity to re-assert our long-standing credentials as an innovative jurisdiction. We are finding ways, for instance, to make the increased flow of information in this world of heightened transparency as smooth as possible. Whether it's FATCA or CRS tax reporting, KYC information-sharing or AIFMD Annex IV reporting, there’s an opportunity for Jersey to harness its FinTech capability to make these complex new requirements more digestible.

“Capturing these opportunities, of course, requires high quality human resources, but I have no doubt that, whatever the future may throw at Jersey in this world of uncertainty, we have the high quality of resilient human capital our funds industry needs to thrive.”

The JFA annual dinner was held on Friday 18th March at the Royal Jersey Showground and featured comedian Miles Jupp as guest speaker. Lead sponsor of the event was Mourant Ozannes, silver sponsors included BNP Paribas Securities Services, Hawksford, Moore and Ogier, and the champagne reception was sponsored by Carey Olsen.

Jersey’s funds industry will need to embrace FinTech, assert its long-standing expertise and focus on innovation in order to remain at the forefront of a constantly evolving global funds landscape, according to the chairman of the Jersey Funds Association (JFA).

JFA News
Tuesday
12
January 2016

Sustained growth in AIFMD private placement statistics

The number of Jersey-registered alternative fund managers marketing into Europe through national private placement regimes (NPPRs) under the EU Alternative Investment Fund Managers Directive (AIFMD) rose significantly again over the final six months of 2015, according to new figures from the Jersey Financial Services Commission (JFSC).

As at December 2015, 104 alternative fund managers (AIFMs) had been authorised in Jersey to market into Europe through NPPRs, up 24% compared to June last year. Over the same period, the number of Jersey alternative funds (AIFs) being marketed into Europe through NPPR authorisation stood at 230, a 12% increase compared to June 2015.

These figures were underpinned by another strong performance in Jersey’s alternatives funds sector last year. Further statistics collated by the JFSC show that, as at September 2015, the net asset value of all alternative funds being administered in Jersey grew by 12% year-on-year to stand at £159bn, including rises of 21% in hedge, 2% in private equity and 16% in real estate funds.

Geoff Cook, Chief Executive, Jersey Finance, commented:

“Jersey has worked hard to maintain simple and efficient access to European markets and it is extremely pleasing that the tried and tested private placement route continues to prove attractive for non-EU managers and funds. Backed up by the recommendation by ESMA that Jersey should be granted a pan-European passport in due course, managers are clearly finding peace of mind in Jersey’s long-term proposition.

“The trend we are seeing is definitely one of building genuine fund management substance in the jurisdiction and this is having a knock on effect in ancillary areas. It was pleasing to see at the end of last year, for instance, asset management software company TORA establish a presence in Jersey and MUFG Investor Services acquire UBS Asset Management’s Alternative Fund Services business as part of their expansion strategies.”

Ben Robins, Chairman of the Jersey Funds Association, highlighted the ongoing popularity of NPPRs and the confidence managers are reporting in Jersey when he gave a talk entitled ‘Marketing Non-EU AIFs & AIFMs in Europe’ at the Private Equity Forum’s AIFMD Conference in London in November 2015. He added:

“The recommendation from ESMA last year was clearly very welcome and put Jersey in a very promising position for future passport marketing, but it is equally good news that the existing marketing route into Europe via NPPRs is working well for Jersey managers in key EU Member States, and continues to grow in popularity. Jersey saw some significant private equity and real estate fund launches towards the end of 2015 and practitioners are reporting a strong pipeline of business as we head into 2016, spanning private equity, real estate, hedge, debt, credit and infrastructure funds.”

The Annual Jersey Finance London Funds Conference, entitled ‘Clear Direction’, takes place on 3 March 2016 at the award winning 8 Northumberland Avenue, and will bring together a range of world class funds professionals to discuss key issues currently shaping the global funds landscape.

The number of Jersey-registered alternative fund managers marketing into Europe through national private placement regimes (NPPRs) under the EU Alternative Investment Fund Managers Directive (AIFMD) rose significantly again over the final six months of 2015.