Butterfield Gains Bermuda Fund Administration Licence

by Amanda Banks, for LawAndTax-News.com, London

21 September 2007

Butterfield Fund Services (Bermuda) Limited, a subsidiary of Butterfield Bank, has announced that it has received approval for a Fund Administration Licence from the Bermuda Monetary Authority.

The regulatory approval means that BFS can now service ‘Administered Funds’, a new classification of Bermuda funds that are allowed to operate based on the proven qualifications of their licensed administrators, as well as continuing to service all other types of regulated funds incorporated in Bermuda.

Since the Investment Funds Act 2006 became effective on 7 March 2007, all Bermuda-based administration companies are required to have a Fund Administration Licence. With the introduction of licensed administrators, it is now possible to register funds under this class with the level of regulation adapted, on the grounds that the administrator is based in Bermuda and subject to codes of conduct and fund rules that will ensure the proper level of governance of the fund. Prior to the new law, fund administrators were regulated under the Proceeds of Crime Act 1977, and were subject to a higher level of due diligence when handling subscriptions and redemptions similar to those imposed on banks, trust companies and investment providers.

Frank Sebestyen, Senior Vice President and Group Head of Fund Services at Butterfield Bank commented: "As the largest and one of the earliest locally based fund administration providers in Bermuda, we are pleased to be among the first companies to have been granted a Fund Administration Licence by the Bermuda Monetary Authority. We will continue to make the necessary investments in highly qualified staff and technology to maintain our position as a leading international fund administrator.”

Finance Minister Paula Cox, who successfully piloted the Act to unanimous approval by the House of Assembly, is confident that the legislation enhances Bermuda’s abilities and reputation as a fund jurisdiction. She has said that Bermuda had to streamline the incorporation process for investment funds and eliminate unnecessary administrative procedures to augment Bermuda’s competitive edge by bringing more clarity and certainty to the authorization process.

While the Cayman Islands remains in the lead as one of the most popular domiciles for hedge funds, with the new legislation Bermuda stands poised to capture a substantial proportion of the administration of funds which register in the Cayman Islands.

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