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Cayman Funds 2016

There has also been a residual impact stemming from the introduction of the Directors Registration and Licensing Law in 2014. Many operators have assessed their portfolio and closed funds that had perhaps been inactive for a while, so they are now proceeding to de-register the funds. Short: EY’s statistics refl ect an increase of 11 percent more consent letters issued in 2015 compared with 2014. This represents the highest level since 2008. This increase can be offset against the liquidations that have taken place due to various reasons such as legal entity rationalisation, lack of performance, consolidation and cost-cutting. Geoff Ruddick: What has been the rough breakdown between master funds and feeder structures being formed? Smith: The initial fl ood of master and feeder fund registrations, post the change in the legislation, has now slowed, although CIMA continues to process a steady stream of such registrations. Susan Lock: That’s good news although I’m a little surprised as it’s our experience that many managers are now launching with a standalone fund offering, rather than a full master/feeder structure. It used to be the case that a manager would launch its full suite of entities—a Cayman and onshore feeder and a Cayman Islands master fund—but now managers are increasingly looking at launching in a piecemeal fashion, perhaps starting just with an offshore structure. This is all part of a cost and time rationalisation as managers face increasing barriers of entry and are looking at their start-up and ongoing costs. Gary Linford: There has been a rationalisation in the industry as refl ected in the number of registered funds but it should be noted that some of the headwinds Cayman needs to tackle are not of our making. The lower oil price has removed many sovereign funds from seeding new fund launches. In addition, with a strong dollar the costs have gone up which together with increased regulatory overheads will drive further consolidation. It has little to do with our costs or the quality of service here in Cayman but it is important that we recognise the impact on those who use our jurisdiction. “We need to get the message across that we are complying at great cost and get credit for those efforts.” Rick Gorter As a country we are looking to diversify our economy but that will not detract from or dilute the importance of the fi nancial services industry. The funds sector is a signifi cant component of the Islands’ economy and we will continue to support its growth and development. Of course, there are challenges from time to time but we are determined to collaborate with the likes of Cayman Finance as well as the private sector more generally. That is an important part of Cayman—the fact that the private sector and the public sector collaborate. That refl ects our commitment to this industry and we are committed to working with all parties to promote it. Jude Scott: From a Cayman Finance perspective, we have seen continued strong demand for Cayman funds. It is increasingly based on what is happening in the wider markets and performance is more important than ever. But we see Cayman funds as being well positioned to benefi t going forward regardless of market conditions. A lot of the feedback we get is that the strength of the domicile is built on the excellent service providers we have here. That, in turn, is strengthened by the robustness we have in local legislation supported by the government. That allows innovation in terms of how we deal with new and existing legislation while ensuring we have the correct balance that is suitable for the market. Heather Smith: The number of funds in Cayman has been relatively stable. The numbers to December 31, 2015, show that there was a slight decrease of approximately 0.6 percent compared with a year earlier. Demand, however, has remained strong. We estimate that we see approximately 25 new funds form in Cayman every week at the moment but that has been balanced out by an increase in terminations, especially at year end. We track other jurisdictions and it seems the overall trend is slightly down everywhere. We are fi nding that there is a greater focus on performance. We suspect that the lifespan of a fund is much shorter these days than it used to be. If a fund does not meet its objectives then the operators are quicker to make the decision to terminate it. 14 CAYMAN FUNDS | 2016 “We have been able to work through issues with investors by engaging in a productive dialogue with them.” Leanne Golding


Cayman Funds 2016
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