Following is a roundup of recent legislative and industry news from the Cayman Islands.
CIMA commissions corporate governance survey
The Cayman Islands Monetary Authority (CIMA) announced on 14
January 2013 that it was undertaking a formal consultation with all
Cayman Islands financial industry associations and other interested
stakeholders on proposals by the CIMA to develop specific corporate
governance requirements and to provide greater transparency for
stakeholders in the financial services industry on the
Islands.
In its consultation, the CIMA will be inviting comments from and
discussion with all sectors of the Cayman Islands financial
services industry and alongside this process the CIMA has
commissioned Ernst & Young to conduct a formal survey with both
written and oral submissions being gathered.
The CIMA in its formal release noted that it had
"...undertaken extensive research into corporate governance
practices, developments and standards, both locally and
internationally. As a consequence of this research, CIMA's
Board resolved to complement this research by canvassing industry
for their views on certain corporate governance considerations
relating to the mutual funds sector." CIMA went on to say that
"[t]he feedback received from this survey, together with the
feedback received from the consultation, will form an integral
component of our considerations when finalising future corporate
governance standards and policy."
The commissioned survey will seek views from the mutual funds
industry on the current corporate governance standards, practices
and the regulatory framework pertaining specifically to the Cayman
Islands mutual funds sector.
CSX proposes rule changes; upgrades trading platform
The Cayman Islands Stock Exchange (CSX) consultation period on
proposed amendments to its Rules will come to a close on the 25th
of January. The Exchange is then expected to publish the amendments
in March 2013. The proposed changes can be summarised as
follows:
Investment Funds – to be rebranded from
'mutual funds', with separate rules for retail funds; new
rules for exchange traded funds and forestry funds; new provisions
for directors; and other changes to reflect recent market and
regulatory developments;
Equity Securities – new rules increasing
the investment threshold for start-up and mineral companies and
raising the suitability and disclosure requirements for equity
issuers;
Listing Agents – expansion of eligibility
provisions and new requirements for corporate advisers to act for
equity issuers;
Eurobonds – to be rebranded as
'corporate and sovereign debt securities', with changes to
waiver provisions for financial statements;
All Issuers – updating of general listing
requirements and procedures; eligibility for electronic clearing
and settlement; new rules regarding de-listing.
Further, in August 2012 the Exchange announced that it had signed
an agreement with Deutsche Borse to use its XETRA trading platform,
which at that time was expected to go live at the CSX in early
2013. The XETRA platform and its core technology is considered by
many to be "state of the art" and is already in use at
several exchanges including the Frankfurt, Irish and Shanghai stock
exchanges and Eurex AG. Approximately 400 banks and brokerage
firms in 20 countries connect to Deutsche Borse's XETRA
Network. The CSX intends to use the platform to develop its
secondary trading market for equities, debt and other securities.
At the date of publication of this release the platform had yet to
go live but was expected to do so in the second half of March
2013.
Legislative news: Master funds and fee increases
Changes to the Mutual Funds Law were introduced in December 2011
requiring certain Cayman Islands master funds within open-ended
master/feeder structures to register with the Cayman Islands
Monetary Authority (CIMA). However, to be subject to the
registration requirement, the master fund had to fall within the
definition of a mutual fund, which, in effect, excluded master
funds that only had one feeder fund from the ambit of the
legislation.
CIMA confirmed some time ago that the intention was always that
all master funds which had one or more regulated feeder funds
should be registered and that amending legislation would be
introduced to clarify the position. The Mutual Funds (Amendment)
Law which came into effect on 10 January 2013 provides that
clarification by amending the definition of master fund. CIMA have
issued an industry advisory advising that master funds will have
until 1 March 2013 to register and pay the requisite fee (currently
US$3,049).
In addition, the CIMA registration fee for a fund other than a
master fund has been increased from US$3,660 to US$4,268. CIMA has
advised that the difference between the 2012 fee and the 2013 fee
must be paid by 15 February 2013 to avoid any penalties.
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