Guernsey Engaging Key Players On EU Hedge Fund Legislation

by Jason Gorringe, Tax-News.com, London

15 October 2009

Guernsey’s Chief Minister, Lyndon Trott, is confident that discussions between the jurisdiction and key players in Europe will secure the future for the funds industry in Guernsey.

Trott said that he was fully aware and had been for some time of the serious threats posed by the EU Alternative Investment Fund Managers Directive, which seeks to regulate all alternative investment funds including private equity and closed-ended listed funds, where the island is a world leader.

Guernsey’s political and industry response, being led by the Commerce and Employment Department with the Guernsey Financial Services Commission and the Guernsey Investment Funds Association, has involved a series of meetings in Brussels.

Deputy Trott said: “This development demonstrates just how vital it is that Guernsey continues to build relationships with Brussels.”

“Brussels is increasingly influential in setting global regulatory standards and our continued prosperity will increasingly depend on our relationship with them.”

The States team has held discussions with the European Fund and Asset Management Association, a number of financial institutions in Europe, and other key individuals involved in this debate.

Commerce and Employment Minister Carla McNulty Bauer said that the purpose of discussions in Brussels were four-fold:

  • To ensure that there is a clear understanding among decision-makers of Guernsey’s current regulatory regime;
  • To obtain information on how the directive is likely to be amended and when it is likely to be finalized;
  • To offer suggestions on how the directive could be amended to ensure that it meets the objective of better regulation but also ensures that European professional investors can continue to access global capital markets; and
  • To develop appropriate contacts within the various European institutions to build relationships and understanding about Guernsey.

Deputy McNulty Bauer said: “There is no doubt that this directive has the potential to have a significant impact on the global alternative funds industry. Guernsey is not immune from those effects.”

“But the directive also presents a significant opportunity for us. Our standards of regulation of alternative funds are high and stronger than that of many EU Member States. My Department is confident that Guernsey is well placed to achieve equivalence under the directive at some time in the future, though that will depend on how the directive changes during the coming months.”

The directive is unlikely to be finalized until the summer or autumn of 2010 and will then not come into force until 2014 or 2015. Until that time the status quo remains and Guernsey’s fund industry can continue to enjoy its current market access for the next five years.

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