JFSC Announces Plans For New Expert Fund Regime

by Philip Morton, Investors Offshore.com

05 February 2004

The Jersey Financial Services Commission on Tuesday unveiled new proposals to facilitate the establishment of ‘Expert Funds’ in the jurisdiction, which aim to streamline the authorization process for new funds whilst maintaining rigorous compliance criteria.

"Expert Funds are a significant new business opportunity for Jersey,” commented David Carse, Director General of the Commission. "To protect less experienced investors, we have laid down strict criteria so that these funds will only be offered to investors with the expertise and resources to accept any extra degree of risk involved as a result of the nature of the investment."

Expert Funds are designed as flexible investment vehicles that can take any form recognised under the laws of Jersey. They may be open-ended or closed-ended, there will be no investment or gearing restrictions, and for the majority of Expert Funds there will be flexible requirements in respect of custody or prime brokerage arrangements.

The JFSC notes that the new funds regime will be particularly suited to hedge funds and other more sophisticated investment products aimed at the more experienced investor.

Investors in the funds will have to certify that they qualify as 'expert' - meeting strict criteria laid down by the Commission - and sign their agreement to an investment warning before investing, explains the Commission.

According to the JFSC, it will be possible to establish Expert Funds in a matter of days. The Commission's proposals will enable 'authorised functionaries' on the Island - for example, administrators, fund managers and trustees- to self-certify Expert Funds which meet criteria set down by the Commission in its Expert Fund Guide.

Every Expert Fund must appoint a functionary, who must be part of a Jersey regulated entity, whose duties include taking steps to satisfy themselves that the actions of the Expert Fund's investment manager are in accordance with the investment and borrowing restrictions set out in the prospectus.

In addition, such functionaries will also be required to maintain adequate records in the Island should they be needed for regulatory purposes. Licensed functionaries will be also be subject to visits by the Compliance Division of the Financial Services Commission.

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