JFA News
October 2021

JFA chair highlights importance of innovation and stability at update

An ability to remain agile in a changing landscape, deliver innovative solutions and offer a platform of stability are key differentiators for Jersey’s funds industry that are resonating clearly with managers and investors, according to the chairman of the Jersey Funds Association (JFA).

JFA Chair Tim Morgan gave his update at the JFA Annual Dinner recently (23 September), attended by more than 350 funds and wider industry professionals, including an overview of the current funds landscape, the ongoing work of the JFA with its key stakeholders in Jersey, and future opportunities for Jersey’s funds sector. It was the first physical return to events for the JFA since 2019, since when all updates had been provided on a digital basis.

Pointing to the fact that Jersey’s funds industry recorded another new record high of fund assets being administered at the half-way point in 2021 (£436bn), with private equity and venture capital increasing by 21% year-on-year and the number of Jersey Private Funds (JPFs) rising to 456, Tim commented:

“The latest figures show that Jersey’s focus on alternative investment funds continues to provide a stable platform of long-term capital. From the start it was clear that the pandemic was affecting participants differently. Large, well-known sponsors with strong platforms continued to fundraise. Conditions were more challenging for new and smaller investment groups. However, many have in any case proceeded with the raising of successful, small, first funds and club deals, and that correlates with the continued growth in the number of JPFs we have seen. It’s a real endorsement of Jersey’s appeal and expertise.”

In addition, Tim, who is also a partner at the Jersey legal practice of the Maples Group, highlighted the importance of Jersey’s funds industry maintaining momentum in delivering innovative solutions to global investors:

“Jersey has continued to test innovations in digital assets, as well as increased amounts of structures aimed at sustainable technologies and related assets, which is very positive. In addition, significant changes have also occurred in the administration space – increasingly tech is a key component of how services are being provided, which is enhancing how governance, risk management and compliance are managed in practice. Jersey service providers have been impressive in adopting a digital first approach over the past year and this is undoubtedly a key part of our success.”

Meanwhile, Tim also highlighted that shifts in global geopolitics, regulation and competition were providing challenges, with Jersey’s focus on maintaining a perfect ecosystem for alternative funds putting it in a strong position:

“The political environment is volatile – the change in US administration; increased pressures from the EU and OECD in relation to tax; numerous policy initiatives from UK in the post Brexit and post pandemic environment; upcoming elections in Germany and France. All this means that there is a need for continual engagement in relation to Jersey’s position internationally. At the same time, jurisdictionally, the competitive environment is intense.

“However, Jersey’s ability to pivot in an agile manner, in particular between JPFs and more narrowly-held joint venture and co-investment vehicles, is valuable and provides popular, efficient solutions. At the same time, Jersey has an incredibly strong culture of partnerships with the JFSC, government, and other industry elements all working together on areas of opportunity or concern for our funds and wider finance industry. This is a real differentiator for us, as we continue to focus on our core message - that Jersey offers a unique ecosystem to provide a platform of stability in a rapidly changing market.”

Entertainment at the event, which was held at the Trinity Showground, was provided by comedian and writer Jo Caulfield and London-based singer-songwriter and former Jersey Young Musician of the Year Sam Walwyn.

The main sponsor of the dinner was Mourant, whilst silver sponsors were BNP Paribas Securities Services, IQ-EQ, Ogier and PwC, and the champagne sponsor was Carey Olsen.

Speaking at the recent JFA Dinner, Chair Tim Morgan provided an update on Jersey's funds industry...

JFA News
May 2021

Innovation and digital adoption key drivers for ambitious Jersey funds industry

The findings of the third annual survey of Jersey Funds Association (JFA) members have highlighted digital adoption, upskilling and product innovation as key drivers for Jersey's funds industry over the coming years...

Accelerated digital adoption, upskilling and product innovation will be key themes for a “confident and ambitious” funds industry in Jersey over the coming years, according to the findings of the third annual survey of Jersey Funds Association (JFA) members.

Presented by JFA Chair and Maples Partner Tim Morgan at a recent virtual event, the findings of the survey, which explored key opportunities and issues for Jersey’s funds industry and the sentiment of practitioners, will be instrumental in informing the JFA’s strategy over the coming years.

Tim was joined at the event by a panel of experts including Mike Byrne, Partner at PwC, Amy Bryant, Deputy CEO at Jersey Finance, Martin Moloney, Director General at the Jersey Financial Services Commission, and Alex di Santo, Group Head of Private Equity at Crestbridge.

Amongst its key findings were that digital transformation will continue to be pivotal to the core operation of funds businesses in Jersey, shaping approaches to regulation, tax and governance over the coming years. Highlighting the impact of Covid-19in particular, 92% of respondents said that the pandemic had changed the way their business uses technology to some degree, with 63% saying it had significantly accelerated digital adoption within their business.

Further, while the vast majority (62%) considered that current skills training was sufficient, around 37% suggested that greater support was needed to support upskilling for a more digitised future.

Meanwhile, on the regulatory front, the survey indicated that Jersey’s response to economic substance rules had been broadly welcomed by the industry, with 42% of respondents claiming that substance rules had had a positive impact on Jersey’s competitiveness, while 70% suggested that Jersey is striking the right balance between ease of doing business and regulation.

It also highlighted that Brexit is still seen as, on balance, a neutral or positive factor for Jersey’s funds industry, with almost a third (31%) of respondents anticipating an increase in business as a result of Brexit.

The survey also painted a picture of an industry that is looking to grow and diversify, with 69% of respondents saying they were confident that their business would grow over the next five years, driven largely by organic growth (69%).

In terms of strategic priorities, both in the short and medium terms, the focus remains on private equity, real estate, venture capital and debt funds, whilst geographically, Jersey’s funds industry is increasingly global in nature, with the US West and East coasts and Middle East markets seen as increasingly important, complementing the existing strong focus on the UK.

Commenting on the findings, Tim said: “Despite the challenges of the last year, Jersey’s funds industry has continued to see hugely impressive growth, with the latest figures for funds business registered in Jersey rising to a new record level of some £378 billion in 2020. The ecosystem Jersey provides for alternatives – its stable platform, quality regulatory framework, expertise and service quality – is clearly resonating with investors, and the outlook for the coming years remains very positive.

“Nevertheless, what this survey shows is that Jersey’s funds industry is both confident and ambitious, and continues to look to push boundaries, innovate and improve. The focus on digital adoption and upskilling comes across clearly this year, with the industry keen to position itself as an authority in the alternatives space, while there are also real ambitions to diversify and grow, including in the ESG space.

“These findings will be vital in informing how we continue to enhance our funds ecosystem, and I’d like to thank our membership for their time and support in putting their views forward.”

Industry News
April 2021

New research highlights post-pandemic domiciliation trends

A new report by IFI Global, supported by Jersey Finance, has been published, exploring post-pandemic fund domiciliation trends...

The rise of sustainable finance, the impact of Brexit, EU regulation and the fallout of the pandemic all have the potential to shape considerations around alternative fund domicile selection, according to new research published recently by IFI Global and supported by Jersey Finance.

Based on the views of alternative managers, law firms and advisors from across North America, Europe and Australasia, including some of the world’s largest investors in alternatives, the research for this new report – entitled ‘The Future of International Fund Domiciliation 2021’ – was carried out between October 2020 and February 2021.

More information and the full report can be found here.

JFA News
March 2021

Jersey funds industry reaches new record heights in 2020

Latest quarterly figures for period ending 31 December 2020 show stellar performance for Jersey's funds industry, driven by private equity...

The upward trajectory of Jersey’s funds industry continued in 2020 with the value of regulated funds business serviced in the jurisdiction growing by 9% over the year to reach a new record level, according to the latest quarterly statistics.

Figures for the fourth quarter of 2020 (ending 31 December 2020), collated by the Jersey Financial Services Commission (JFSC), show that the net asset value of regulated funds under administration in Jersey grew by £32.4bn annually to stand at £378.1bn. The increase reflects a period of sustained growth for Jersey’s funds industry, with the figure at the end of 2020 rising by more than two thirds (67%) over the last five years.

In particular, the alternative asset classes, which now represent 89% of total funds business in Jersey, continued to prove the engine room of growth, with private equity and venture capital up by 21% year-on-year to £164.6bn. In addition, the number of registered Jersey Private Funds, which are not included in the headline figures, grew by almost 100 over the year to reach a total of 403.

Meanwhile, the figures also show that deposits held in Jersey banking institutions at the end of 2020 stood at £131.7 billion, down 8% year-on-year, a reduction that was heavily influenced by currency movements and global market volatility, with 56% of deposits in Jersey held in foreign currencies.

Corporate activity, meanwhile, was also very strong in 2020, with a record level of company incorporations in the fourth quarter of 2020 and the total number of live companies on the register standing at the second highest level in ten years at the end of the year (33,626).

Commenting on the figures, Jersey Finance CEO, Joe Moynihan, said:

“Against the backdrop of a really challenging year for global markets, this is a positive picture for our industry, and for our funds sector in particular which has again achieved stellar growth to reach new record levels. The resilience and stability Jersey has shown has clearly resonated amongst investors and managers, as they have continued to put their faith in Jersey as a specialist high quality centre for alternative funds. Despite currency movements impacting overall bank deposits, material deposit levels have stayed largely stable and consistent over recent years, while the positive corporate activity we saw in 2020 is a reflection of the health of the industry and our role in supporting cross-border activity.

“Overall, thanks to the collaborative efforts of Jersey’s industry, government and regulator, we are in a strong place at the start of 2021 and stand ready to deliver on our duty as a responsible IFC and support global economic recovery in the months ahead.”

Tim Morgan, Chair of the Jersey Funds Association, added:

“Jersey continues to work tirelessly to create the ideal ecosystem for alternative funds, and these latest figures provide welcome evidence of the appeal Jersey continues to have, in particular in the private equity, venture capital and alternative space, with a number of big-ticket funds coming to market through Jersey over the past twelve months. The fact that almost 100 new Jersey Private Funds have been registered over the year is also hugely positive, underlining both the appeal of the JPF as the go-to vehicle for professional investors but also Jersey’s ability more widely to innovate in the right areas.”

JFA News
February 2021

Watch Again: Jersey Finance Funds Masterclass: 2021 Domiciliation and Brexit Update

Jersey Finance hosted a Masterclass looking at fund domiciliation in a post-Brexit landscape on 4 February 2021. Watch it again here...

Live streamed last week (4 February), the latest Jersey Finance Funds Masterclass, which featured a number of industry and Government of Jersey representatives, explored what lies ahead for the European alternative funds landscape in the wake of Brexit with the transition period having now come to an end. Amongst the themes explored by panellists were the change stemming from Brexit, the review of the AIFMD, the shifting global corporate tax environment and the stability Jersey offers the alternative funds community in light of this period of change.

Watch the Masterclass again here.

Industry News
December 2020

Fund Domiciliation in a Fast Changing World

New white paper published by IFI Global

Earlier this month, Jersey Finance contributed to a white paper by IFI Global looking at domiciliation trends in a fast moving world.

According to the report, BEPS may well be the most important development for structuring in the alternative fund industry in a generation, with many fund managers considering their domiciliation options more closely now, in part because of the growing costs and regulatory requirements of being in certain Caribbean jurisdictions.

The full white paper can be found here.

JFA News
December 2020

Nurturing the perfect ecosystem for alternatives

Jersey - First for Finance 2020 - 2021

In the 12th edition of Jersey - First for Finance, JFA chair Tim Morgan explores how Jersey's funds industry is focused on honing its vision to provide the perfect ecosystem for cross-border alternative funds.

The full article and publication can be found here.

JFA News
August 2020

Jersey Funds Association looks to the future with new committee

The Jersey Funds Association has elected its new committee for the coming year as it looks to maintain momentum and continue to champion Jersey as the perfect ecosystem for alternative funds.

The Jersey Funds Association (JFA) has elected its new committee for the coming year as it looks to maintain momentum and continue to champion Jersey as the perfect ecosystem for alternative funds.

Elected at the JFA’s recent Annual General Meeting (17 July), the committee retains some continuity whilst also introducing a number of new faces. Tim Morgan remains Chairman and Michael Johnson Vice Chairman, whilst the remainder of the committee now also includes Richard Anthony, Mike Byrne, Steve Cartwright, Ben Dixon, Mark Grenyer, Ben Honeywood, Niamh Lalor, Dilmun Leach, Chris Marshall, Robert Milner, Simon Page, Martin Paul, Tom Powell, Peter Rioda, Ben Robins, Martin Rowley and Sarah Sandiford.

At the AGM, Chairman Tim Morgan also delivered an annual report identifying the key challenges and opportunities for the industry:

 “Jersey's funds industry operates in a fast evolving environment, with the ongoing economic and social implications of the coronavirus pandemic needing to being absorbed by a market that was already seeking to plan for and adjust to the political uncertainties relating to the UK's ongoing Brexit process.

“The pandemic is already proving to affect asset classes and sectors in very different ways, but for Jersey the essential positive message remains that we offer a platform of stability in a rapidly changing market which is borne out through very high levels of activity through the recent period covering the pandemic. This is a message that the new-look JFA committee will continue to champion over the coming year.”

Meanwhile, pointing to specific areas where the JFA had identified opportunities for Jersey, Tim commented:

“A trend away from widely-held blind pool structures and towards more narrowly-held joint venture and co-investment vehicles appears to be continuing, particularly in the private equity, real estate and adjacent sectors. The Jersey Private Fund regime continues to provide a popular, cost-effective and strong solution in this space.

“In addition, the trend of inward migration by substance managers, particularly in the hedge fund but also more recently in the private equity and venture capital space, continues and Jersey is an increasingly important hub for managers with a substantive local presence.

“Meanwhile, as the market develops further through the process of Brexit and as EU regulation continues to build, we anticipate increasing opportunities in Jersey for a wide variety of asset classes, transaction structures and investor bases.”

Acknowledging the work and achievements of outgoing committee members, Tim concluded by thanking all those supporting the work of the JFA:

“I’m really grateful for the efforts of the committee over the past twelve months. We have achieved a lot. I’m also pleased to welcome some new faces to help drive forward our plans for the coming year across our legal and technical, education and training and communications remit. In particular, I’m delighted that Tom Powell will be leading a new group for us to coordinate a strategy around ESG, an area that is now a fundamental part of our overall proposition as a jurisdiction.”

Industry News
July 2020

Jersey anticipates fund migration uptick following amendment to Limited Partnership legislation

A new amendment to Jersey’s legislation will make it significantly easier for managers to migrate limited partnership fund structures to the jurisdiction...

Jersey Finance has welcomed a new amendment to Jersey’s legislation that will make it significantly easier for managers to migrate limited partnership fund structures to the jurisdiction.

The changes to the Limited Partnership (Jersey) Law 1994, which were approved by Jersey’s government this week to come into force today (17 July), introduce a new statutory basis for limited partnerships, which are frequently used for alternative fund structuring, to be migrated from other jurisdictions, providing greater legal certainty for managers and investors.

Whilst migrating a limited partnership to Jersey has been technically possible in the past, the move brings Jersey in line with the laws of other jurisdictions, making it easier for lawyers to give a clean legal opinion as to the validity of the migration of a limited partnership into Jersey from elsewhere, as the same legal entity.

Commenting on the amendment, Joe Moynihan,CEO, Jersey Finance, said:

“In an increasingly complex global alternative funds environment, managers are increasingly looking at their fund structuring options and indeed, over recent months, our funds industry has reported a rise in interest in Jersey from private equity and other alternative managers wanting to restructure their funds. They are attracted by the sort of stability, expertise, and high-quality service levels Jersey offers, whilst its strong track record in corporate governance, its ability to offer certainty around substance and its ‘whitelisted’ status are all seen as real benefits too.

“This amendment makes it easier for managers to migrate their structures from elsewhere in a quick, cost-effective manner so that they can benefit from Jersey’s ideal alternatives ecosystem. We anticipate a strong uptick in fund relocations following this amendment.”

Tim Morgan, Chair of the Jersey Funds Association added:

“The industry, regulator and government in Jersey have all worked very efficiently together to bring this amendment to fruition impressively quickly. This is a really important development, introducing an express mechanism whereby limited partnerships can migrate to Jersey quickly and seamlessly, and it will undoubtedly prove an attractive proposition for managers who are exploring how they can better navigate the complex environment they operate in. We have already seen a number of enquiries for migrations into Jersey in recent weeks.”

A FAQ about the amendments can be found here.

A factsheet about the migration of foreign limited partnerships to Jersey can be found here.

JFA News
December 2019

Jersey Funds Association presents findings of annual member survey

The findings of the second annual survey of the Jersey Funds Association’s (JFA) members will be instrumental in informing the organisation’s future direction and strategy, according to Chair Tim Morgan.

The findings of the second annual survey of the Jersey Funds Association’s (JFA) members will be instrumental in informing the organisation’s future direction and strategy, according to Chair Tim Morgan.

Highlighted to an audience of industry professionals at a presentation held at the Jersey Museum last week (28th November), the survey explored key opportunities and issues for Jersey’s funds industry and the sentiment of practitioners.

Amongst its key findings were that the industry’s approach to Brexit and new economic substance rules were balanced but largely positive, with over 80% saying Brexit would be neutral or increase business and around three quarters saying the same about substance rules.

Members were also very positive in terms of their growth outlook, with 84% saying they were confident or very confident of growth, a significant increase from last year.

In addition, in respect of technology the survey indicated a clear trend, with over 56% of respondents saying that they had employed automation technology over the past year.

Tim commented: “The past year has posed a number of significant challenges, including Brexit and the introduction of substance legislation however we really shouldn’t underestimate just how positive the outcome of Jersey's work around these issues has been for our industry. The recognition from the EU at the beginning of the year has shown without doubt that as a jurisdiction we are serious about cooperation and global standards, and that has translated into good business flows. The fact that our industry now administers in excess of £340bn of assets – a record high - is no accident. That buoyancy really comes through in our survey this year.

“We are pragmatic as an industry too, though. What our survey shows us is that our members are keen to maintain a growth trajectory by looking at innovation, continuing to source the best talent, engaging with stakeholders, and differentiating ourselves through service quality, ease of doing business and stability.

“These findings will be vital in informing how we continue to enhance our funds ecosystem, and I’d like to thank our membership for their time and support in putting their views forward.”

Industry News
November 2019

Updates to substance guidance good news for fund managers in Jersey

Updated Guidance Notes published last week (22 November) by Jersey’s government, in conjunction with the other Crown Dependencies, provide further clarity around the interpretation of economic substance legislation.

Updated Guidance Notes published last week (22 November) by Jersey’s government, in conjunction with the other Crown Dependencies, provide further clarity around the interpretation of economic substance legislation which came into play in January this year and reflect Jersey’s focus on maintaining a substance-driven environment for fund managers, according to the Chair of the Jersey Funds Association.

Following the publication of the first iteration of Guidance Notes in April this year, the updated notes contain a number of points of relevance to the funds industry, in particular:

• that collective fund vehicles are out of scope of the law (save where they are carrying out fund management activities themselves, which will be the subject of future legislation) but their subsidiaries could still be in scope if they derive income from a relevant sector
• there is more specific guidance on the treatment of cell companies
• there is further clarification on the basis on which certain isolated decisions can be taken outside the island, provided this does not outweigh decisions taken in the jurisdiction.

Tim Morgan, Chair of the Jersey Funds Association, said: “This additional detail should prove helpful to managers in terms of how the law will be applied, and should give them reassurance that Jersey takes its economic substance commitments seriously. In particular, the notes generally clarify that funds themselves are not caught by the law and also provide more detail about the basis on which governance decisions should be taken.

‍“As a centre for fund management, Jersey has long had a market-leading approach towards substance and these guidance notes reflect Jersey’s approach to governance best practice.”

The JFA welcomed the initial publication of guidance notes earlier this year, as reinforcing the jurisdiction’s proposition for fund management.

Industry News
September 2019

Further upbeat fund figures revealed at London Funds Conference

Further positive figures about the size of the funds industry in Jersey were unveiled at Jersey Finance’s London showcase conference for the funds sector last week.

Further positive figures about the size of the funds industry in Jersey were unveiled at Jersey Finance’s London showcase conference for the funds sector last week.

Elliot Refson, Business Development Director - Funds at Jersey Finance, said that the number of Jersey Private Funds (JPF) had increased 25% in six months, highlighting the success of Jersey’s government, regulator and industry working together to create the best possible environment for attracting innovative, quality funds business.

Figures from the Jersey Financial Services Commission (JFSC) showed that the number of JPFs, a structure introduced in 2017 to cater specifically for the needs of small groups of sophisticated investors, had reached 257 by 30 June 2019, up from 205 at the end of 2018, with assets under management of £43 billion.

Joe Moynihan, CEO of Jersey Finance, described Jersey as positioned perfectly to act as a quality filter to manage international financial flows: “As investors look for stable IFCs that offer specialist expertise, Jersey can be a voice of reason among the noise, ready to support investor ambitions.”

Furthermore, irrespective of the outcome of Brexit, Jersey was able to bridge the gap between the UK and Europe thanks to the bilateral agreements that were in place with the EU alongside its long standing relationship with the UK, boosted by a recently signed Memorandum of Understanding between the JFSC and the UK Financial Conduct Authority which gave fund managers added certainty around accessing UK investor capital through Jersey in the build up to Brexit.

Entitled ‘Beyond Boundaries’, the annual Jersey Finance funds conference 2019 (on September 10) attracted more than 350 delegates and a range of industry leading speakers and panellists who discussed the impact of regulation and governance, the trends in the alternative funds sector, and further examples of innovation and trailblazing by fund managers, lawyers and administrators who were using Jersey for their fund structuring.

The event was also an opportunity to flag up how Jersey had become a clear choice for socially responsible investing (SRI) and especially impact investing, with Mr Moynihan noting that there were already more than 30 SRI funds under administration in Jersey with assets valued at US$7.4 billion.

He also highlighted Jersey’s increasing global footprint pointing to the fact that Jersey became the first IFC to be permitted to open an office in the Dubai International Finance Centre last year. Further, next month, Jersey will formally open its first office in New York, partly to support the growing demands from US promoters choosing Jersey evidenced by US promoter assets under administration in Jersey increasing by 148% over the past five years.**

Meanwhile, the Island’s rapid investment in technology – it is the first place in the world to have full fibre telecom networking delivering speeds of 1 Gbps (gigabits per second) – had positioned the jurisdiction at the forefront of fintech investment fund services.

The conference, at the Royal Lancaster Hotel, included keynote addresses from Todd Buchholz, former Director of Economic Policy at the White House and current managing director of the US$15 billion Tiger hedge fund, and Dan Snow, BAFTA award-winning broadcaster and popular figure on BBC television presenting historical topics.

A total 18 industry experts from London and Jersey contributed to four breakout sessions which were entitled ‘New Alternatives’ moderated by Alice Murray, founding editor of The Drawdown; ‘Solutions for Fund Managers – Governance, Substance and Location’, with moderator Tim Morgan, Partner, Mourant and Chairman of the Jersey Funds Association; ‘Building Global Bridges’ moderated by Nicholas Neveling, editor, Real Deals; and ‘The Evolution of Real Estate’ with moderator Sophie Reguengo, Partner, Ogier.*

They debated factors affecting the alternatives market, pinpointing the strengths of the Jersey offering, drawing on the use of case studies outlined by managers, while also examining how the funds sector was responding to the technical and regulatory challenges it faced and Jersey’s role in providing solutions.

Summing up the Jersey offering, Joe Moynihan added: “Having one of the largest communities of finance industry and legal specialists of any IFC, combined with our speed to market, adoption of the latest standards in transparency, our tax neutral status and mature environment for funds business and with increasing numbers of local firms and advisers operating across multiple jurisdictions, we have all the hallmarks to remain the jurisdiction of choice.”

JFA News
May 2019

Substance rules will strengthen fund management proposition

New Guidance Notes were published last month (26 April), designed to provide clarity around recently introduced ‘economic substance’ legislation in Jersey and how that legislation, which came into play in January this year, should be interpreted.

New Guidance Notes were published last month (26 April), designed to provide clarity around recently introduced ‘economic substance’ legislation in Jersey and how that legislation, which came into play in January this year, should be interpreted.

As the JFA acknowledged last month, the legislation was introduced to meet the requirements of the EU's Code of Conduct Group for Business Taxation around appropriate levels of substance for certain tax resident entities in Jersey, following an assessment by the EU that ultimately saw Jersey formally recognised as a cooperative jurisdiction.

With that in mind, these guidance notes are helpful, providing interpretations of how the law should be applied by Jersey-based fund managers, and highlighting what it means for service providers and fund structures – particularly in terms of reporting and the tests the law provides for around governance, income generating activities, and physical office and staff presence.

It’s sensible of course that fund managers will look at this guidance and assess the structures they have in place to make sure they can amply meet the necessary criteria.

However, although this legislation underlines unequivocally that Jersey is committed to best practice and international cooperation, it is also worth noting that, from a fund management perspective, it is further evidence of the direction of travel Jersey has been pursuing for some time and reflective of Jersey’s ongoing commitment to nurturing a substance-driven environment for fund managers.

It’s no coincidence that the number of fund promoters in Jersey has almost doubled in the last five years to more than 250, whilst Jersey has a community of more than 20 hedge fund managers – a figure that continues to rise.

Managers spanning the full range of asset classes and sizes have in recent years, for instance, been bulking out their operations in Jersey through staff and premises to the point that Jersey now has a significant on-the-ground management community, whilst we can also boast a considerable and growing infrastructure of experienced directors and risk management, administration and compliance experts.

Jersey has established a reputation as a centre for fund management precisely because it has long been a jurisdiction of substance with a regulatory environment that is internationally-recognised and that is already in tune with global thinking on substance.

Crucially, the new rules absolutely work with Jersey’s existing regime and the majority of fund managers will not perceive them as creating an additional layer. Jersey was, for instance, an early mover on the OECD’s BEPS project, which had a focus on substance, and in 2017 became only the third jurisdiction in the world to have completed domestic ratification of the BEPS agreement.

In addition, the significant work Jersey has done around the AIFMD over the past decade has positioned it well as a jurisdiction that is focused on supporting managers and giving them a solid platform for growth.

As a result, the new substance legislation should not come as a shock to managers operating in Jersey.

And if it is concluded that a manager needs to change its arrangements, the expertise is already readily available in Jersey to take on any extra work. Reporting is a case in point - in some instances, for example, older agreements might have delegated reporting arrangements to another entity in the group based outside Jersey. Under these new rules, reporting is a core income generating activity for a Jersey fund manager and if a manager concludes that it will be responsible for reporting as one of its core activities, reporting must be carried out by or on behalf of the manager in Jersey. Because the intellectual capital and capacity is in Jersey to service reporting functions, any change to the group's contractual framework to facilitate reporting from Jersey should be straightforward.

As a result, the expectation is that not only will managers here be able to meet the new criteria as set out by the new legislation, but that the new parameters will actually prove to be a natural next step that will further bolster Jersey’s appeal as a centre that is ready and willing to provide the perfect ecosystem for fund management activity.

The infrastructure is here, the connectivity is here, and the market access is here, and that should be a compelling proposition.

JFA News
May 2019

JFA chair underlines importance of continuing to adopt a “brave approach”

Jersey’s focus on alternative funds and its growing status as a centre for fund management is positioning it positively but sustained bravery is essential to Jersey’s future success, according to the Chairman of the Jersey Funds Association (JFA).

Jersey’s focus on alternative funds and its growing status as a centre for fund management is positioning it positively but sustained bravery is essential to Jersey’s future success, according to the Chairman of the Jersey Funds Association (JFA).

Speaking at this year’s annual JFA Dinner (3rd May) held at the Royal Jersey Showground, Mike Byrne told an audience of over 450 funds professionals, senior politicians and regulatory representatives that “Jersey’s funds industry looks in excellent health” with figures for the end of 2018 indicating that the total net asset value of funds under administration in Jersey stood at a record high of more than £320bn, up 15% year-on-year.

Pointing to rising levels of business across the alternative asset classes, Mike, who completes his third and final year at the helm of the JFA this summer, commented:

“It’s been a very successful year for our funds industry, both in the funds and the fund manager space, with our focus on alternative funds creating a very stable platform of long-term capital that is largely insulated from short term market sentiment.

“That focus is very well placed, with pensions, sovereign wealth funds and institutional investors all continuing to allocate to private equity, private debt, real estate and infrastructure funds. With a record £320bn of fund assets now being serviced across our regulated funds space and a further £20bn now held in Jersey Private Funds, there is a clear picture of an extremely healthy jurisdiction.”

In addition, Mike pointed to how Jersey’s growing status as a fund management centre is positioning it well in light of new economic substance rules:

“Our industry has faced a number of challenges over the past year but we have come out the other side very successfully. In particular, the past year has seen an almost unprecedented level of cross-industry work to ensure that we responded to economic substance requirements by developing a law that demonstrates our commitment to meeting global standards and reflects the true substance which we know exists in our industry.

“In fact, we are seeing an ever-increasing community of fund managers fully resident in the island, across private equity, hedge, debt, real estate and crypto funds. These managers are bringing a real depth and diversity to our industry at a time when the issue of substance is so high on the agenda.”

Looking to the future, Mike underlined the importance of Jersey adopting a bold approach if it is to continue to be successful:

“We must continue to adopt a brave approach in how we operate, in the markets we serve and in the products we offer. We need to think creatively, for instance, about how we bring to life the Jersey proposition and the positive solutions we can provide for both EU and non-EU investors. And, whilst discussions around the AIFMD and passports now seem long in the past, the fallout from Brexit continues to have unintended consequences on many fund jurisdictions, including Jersey, and we must be prepared for that.”

Lead sponsor for the evening was Mourant and silver sponsors were BNP Paribas Securities Services, IQ-EQ, Ogier, Praxis IFM and PwC, whilst the champagne reception was sponsored by Carey Olsen

JFA News
March 2019

JFA welcomes EU recognition

Commenting on ECOFIN’s recognition of Jersey as a cooperative centre yesterday (12 March), Mike Byrne, Chairman of the JFA.

Commenting on ECOFIN’s recognition of Jersey as a cooperative centre yesterday (12 March), Mike Byrne, Chairman of the JFA, said:

"Jersey has close ties with the EU through its funds industry – around a third of funds business in Jersey touches the EU in some capacity, whilst the number of alternative fund managers opting to structure their funds through Jersey to market into the EU through private placement grew by 13% last year. Maintaining a good working relationship with the EU is therefore absolutely vital, so this recognition, which comes after a period of really positive engagement between Jersey’s government and EU officials, is welcome news.

"In Jersey we take our obligations as a responsible centre that upholds the highest standards of oversight and governance extremely seriously, and we’re confident that our existing approach, coupled with the new economic substance legislation, demonstrates that we are a genuine funds industry of substance here.”

The Government of Jersey's full statement can be found here.