Thriving Future expected for Cayman Hedge Fund Industry
On August 7, 2009, ICFA Magazine published an article entitled “Growing Stronger”
that analysed the challenges that face the hedge fund industry in the Cayman Islands. Generally, fund administrators in the jurisdiction are positive about the future, however, the problematic aspects of hedge fund industry are definitely worth discussion.
The article pointed out that Cayman as a hedge funds jurisdiction is thriving.
Carlyle McLaughlin, chairman of the Cayman Islands Monetary Authority (CIMA), suggests that the jurisdiction is at a crossroads, and it will be able to find a productive niche that will guarantee its future as an international financial centre. However, the Authority expects that there will be many changes that are necessary to reflect tighter onshore deregulation of funds and the necessity of greater overall transparency for the industry. Cindy Scotland, CIMA managing director, believes that every situation and every crisis presents opportunities. She thinks that the Cayman Islands will be able to remain a key player in the global financial market but it will provide new products and services.
It should be noted that the Cayman Islands has a higher concentration of industry experts than any other hedge fund domicile. Also, it has the determination and political will to go ahead of the field. Despite the possible furhther unjustified attacks on the jurisdiction, its private sector and the government are determined to keep the international financial centre not only existent but also thriving in the new global economic environment. Many challenges face the fund administration sector because the hedge fund industry goes through a period of intense and extraordinary change in general.
The article says that “for Cayman fund administrators the landscape was already changing before the events of 2008”. Although maintaining a presence in the jurisdictions, some administrators found it too costly and ime-consuming to keep staff and bring in new workers.
So, the future of the hedge fund industry remains unsettled. But fund administrators in Cayman believe that they will remain a key part of the offering. Despite the fact that many administrators have slimmed down operations and moved the bulk of work to the United States, Canada or other countries, all administrators believe that maintaining a presence in the jurisdiction is essential.
Of course, few would like to predict what awaits the jurisdiction over the next 12 months, but, nevertheless, all administrators are confident that, whatever obstacles onshore governments and regulators may throw at the Cayman Islands, it will survive as a hedge fund jurisdiction of prominence.