Innovation,
challenges and
competition
The funds industry continues to innovate and embrace change as it
keeps pace with increasingly dynamic investment markets and global
economic uncertainty. All this plus the implications of economic
substance regulations were among the topics discussed by a panel of
experts at a roundtable hosted by EY.
CAYMAN FUNDS | 2019
We also saw fewer terminations. In previous years we had seen
more directors and operators of funds terminating funds pretty
quickly if they were not active or not doing what they were intended
to do. But we are fairly confident what is left are truly active funds, or
there is some intention of business getting underway shortly.
In relation to fund administrators we continue to see a decline in the
overall numbers, and a lot of requests for changes in shareholding.
That’s not unique to Cayman; we’re seeing fewer but larger fund
administrators globally.
In terms of investment managers, and in relation to overall number
of licences, we went from 34 at the end of 2017 to 38 at the end
of 2018 and we’ve also seen quite a bit of interest in terms of new
applicants. There is also a lot more interest in getting a full licence
here in Cayman. We are seeing interest mainly in relation to broker
dealer and market makers activities, and online trading platforms
remain very popular.
This increase in new applications has been fuelled mainly by changes in
Europe. European entities could previously provide securities investment
business services to the rest of the world from their operations in Europe
but this has now changed because of new rules in Europe.
How do you characterise the
health of the funds sector in
Cayman?
LaNishka Farrington-McSweeney: We think the industry is in good
health. Discussions like this are really important because it allows
the industry to collectively discuss some of the challenges and
opportunities we face.
On behalf of EY, we are excited to have you here and see what you
have to say today. We want to be a part of that and help communicate
these messages to the wider industry. We want you to share with us
how business is for you and how you are faring. But first I think we
have some statistics from CIMA.
Heather Smith: It’s good to report that after about four years of seeing
the overall fund numbers fall year on year overall, we have had a slight
increase. At the end of December 2018, we saw 10,992 funds compared
with 10,559 the year before—a 4 percent increase. It was modest, but
we were happy to see that. Last year, about 109 new funds per month
were formed compared to about 90 per month in 2017.