The Monetary Authority has updated directors on the
latest local regulatory developments at a Cayman Islands Directors Association
Luncheon on 24 September at the Ritz-Carlton.
The CIDA event featured a regulatory overview from the US
with Herrick Feinstein Partners Irwin Latner and Patrick Sweeney and an outline
of the state of discussions over the European Alternative Investment Fund
Managers Directive by John Fowler, head of investment funds at Maples and
Calder. However, it was Yolanda McCoy, head of CIMA’s investments and
securities division, who kicked of the presentations with the latest news on
planned regulations in Cayman.
She began by disclosing the authority’s latest fund
statistics, stating that “as a hedge fund jurisdiction of choice our numbers
remain very impressive”. As of 24 September, CIMA had authorised 9,589 funds up
from 9,486 at the end of June. The total number of funds has increased for the
second quarter running. The authority averaged 103 authorisations and 45
terminations over the first eight months of 2010 compared to 98 authorisations
and 63 terminations over the same time period last year, she said.
Despite media coverage of a growing trend toward UCITS
and funds transferring to jurisdictions such as Luxembourg, Malta or Ireland,
McCoy said there is no supporting evidence for this from a regulatory point of
Fund administrator statistics recovered slightly from the
second quarter of 2010 with 94 full fund administrators in September as opposed
to 92 at the end of June, bringing the total number of full, restricted and
exempted administrators to 133.
“We have observed a growing interest in the funds
business and we are currently processing two full mutual fund administrator
license applications,” McCoy noted.
New fund administrator category
CIMA aims to strengthen the industry further by
introducing a new fund administrator category in response to demand from the
private sector. The new proposed license is designed to attract small to medium
or niche service companies to the Islands.
The category, approved by the CIMA board earlier this
year, was considered because the Mutual Fund Law does not allow service
providers to apply for a license in order to do individual components of fund
administration only, such as registering and transfer agency services. The new
license is aimed at RTA services by requiring only a nominal net worth,
professional indemnity insurance and the obligation to have a principal office
in the Cayman Islands.
Funds registration platform CIMA Connect
McCoy further outlined CIMA’s new e-business portal that
will enable online access for service providers to complete and submit requests
for CIMA authorisation along with any required documentation.
The initial release of CIMA connect this month will be
for fund authorisation, registration and licenses, McCoy said. “Service
providers will be able to see when their requests are submitted, track the
progress of their submissions and receive notification when the fund has been
approved,” she explained. Service providers can connect by completing an
application available at www.cimaconnect.com.
CIMA Connect aims to streamline and automate manual
processes within the authority, commencing with the investment and security
division. After an initial phase CIMA plans to release a schedule of functional
improvements that may include online requests for changes such as entity’s
name, changes to beneficial ownership, amendment to business plan, approvals
for directors, senior officers and requests for financial extensions.
Access for insurance, banking, trust and company managers
will be phased in at a later stage.
Amendments to mutual funds and investment business laws
Two bills, the Mutual Funds Amendment Bill (2010) and the
Security Investment Law Amendment (2010), are expected to be implemented before
the end of the year, McCoy said.
“The amendments will give the authority greater
discretion with regards to the registration of a mutual fund or a security
investment business,” she said.
Specifically it will give CIMA the extended authority to
impose conditions on a registration and to refuse or cancel a registration. The
amendments also require a fund to declare if a proposed operator, manager,
officer, investment adviser, custodian or administrator has been prosecuted for
a criminal offence, been sanctioned by a self-regulatory organisation or is not
in good standing with a regulatory or self-regulatory association.
A similar provision will be extended under the Securities
and Investment Business Law, McCoy said.
In addition the Proliferation and Financing Prohibition
Law 2010, which is already in effect gives the authority the power to take
action against persons and activities that may be related to terrorism
financing, money laundering or the development of WMD.