Cayman Islands: The Cayman Islands Stock Exchange

The Cayman Islands Stock Exchange, now in its third year of operation, has recently launched a serious of new products, which have confirmed its status as the world’s fastest growing bourse.

Although it was initially set up to provide a listing facility for the specialist products of the Cayman Islands, including offshore mutual funds and specialist debt securities, demand for new products from institutional investors world-wide has resulted in a rapid expansion of services.

In recent months the Exchange has introducing listing rules for sponsored and unsponsored global depositary receipts. It has also won plaudits from the finance industry for its new rules governing the listing of derivative warrants.

Major institutions from the US, Europe and Latin America have found that the Exchange’s innovative and flexible approach has proved a major draw when compared with other exchanges.

The Exchange’s Chief Executive Officer, Ann Nealon, said: "We have developed a very good relationship with a number of large institutions by being responsive to their needs and we will continue to develop and offer the necessary facilities for institutions world-wide.

"As well as institutional products we are now working on a number of initiatives to increase the Exchange’s local profile."

The Exchange is a private limited company wholly owned by the Cayman Islands Government but operated as an independent entity under the stewardship of Ms Nealon. It is fully electronic and has installed innovative information technology systems for the processing of listing applications, and provides a swift and efficient service. In terms of trading capabilities it uses a Bloomberg electronic trading platform and operates in a virtual environment. It also places great emphasis on its Internet facilities and listed issuers have access to the Exchange’s own web site for their marketing materials.

The achievements of the Exchange in its first two years of operations are impressive. It has around 200 issuers approved for listing and these issuers are a mixture of mutual funds, hedge funds, specialist debt vehicles and warrants.

Given that the funds industry in the Cayman Islands continues to grow it is not surprising that the first batch of approved issuers to list on the Exchange were mutual funds. Latest government statistics show that there are now over 2000 regulated mutual funds in Cayman with an estimated US$200 billion of assets.

The Exchange has won approval from the mutual fund industry because it focuses on disclosure of relevant financial information rather than on actually restricting the activities of the fund. It does not impose any investment restrictions on the investment policy of a fund, nor does it insist on any prescribed degree of investment diversification or prohibit newly incorporated funds from changing their investment policies for a specific period of time.

The lack of such restrictions gives a fund more flexibility and makes a listing particularly attractive to those funds offering highly focused investment strategies and to hedge funds in particular. Some of the most prestigious hedge funds managed out of the US have found the Exchange to be an attractive listing venue. These include Texas-based Maverick Capital, which manages over US$1 billion and Kingdon Capital Management Corp of New York whose offshore fund is capitalized at over $US1.7 billion.

In terms of deciding whether a fund is suitable for listing, the Exchange focuses on the parties involved with the fund, its directors, promoters, the investment manager and adviser and their relevant experience. It does not apply a benchmark figure with respect to assets under management to decide whether, for example, a fund manager is adequately experienced. It will take into consideration other factors such as a manager’s existing track record to decide suitability for listing. This may make the Exchange attractive to newcomers in the investment management business as well as more established players.

The Exchange guarantees response times in terms of dealing with comments upon documentation. Delay is a common complaint about other stock exchanges but the Cayman Exchange guarantees initial comments on the first draft of listing particulars within five days of the receipt of the draft listing document, and a three-day turnaround thereafter. With commitment on both sides to expediting the listing process, it takes approximately two to four weeks to approve a mutual fund listing application.

The Exchange has also introduced a responsive regime for specialist debt listing. This has paid dividends attracting business from international finance houses like Merrill Lynch, Deutsche Bank and Lehman Brothers.

The debt listing facility offers a significant advantage for asset-backed securities. Only limited information on the underlying assets must be disclosed in the listing document, if the Exchange is satisfied that investors are able to obtain information from publicly available sources which is sufficient to enable them to form an opinion as to the value of such the securities being acquired.

The Exchange also has a special provision for listing debt programmes. Once an application for listing a debt programme has been approved, the issuer will be able to issue and list securities under that programmme for a period of five years before they need reapply.

A specific provision has also been made to accommodate issuers who wish to list a tranche or series of securities under a debt programme in circumstances where all the securities to be issued under the programme have already been approved for listing on another recognised exchange. The Exchange will accept the listing documentation prepared in connection with the issuer’s application to the other exchange.

Only the pricing supplement setting out the final terms of the issue and any supplementary listing particulars, needs to be prepared.

The Exchange has introduced also new rules for listing collateralised bond and loan obligations (CBO’s). These specialist forms of debt instrument have witnessed spectacular growth in the last two years. In 1997 the estimated value of the industry was US$45 billion compared to US$12 billion the previous year.

Issuers of debt securities often require a listing to satisfy the needs of institutional investors. The new rules for CBO’s are designed to address the complex issues raised by these specialist products and the Exchange is confident that it will attract business in this area and compete successfully with other exchanges. Salomon Smith Barney in New York were the first to have a listing approved under these new rules

The growth in the number of debt securities listed on the Exchange is partly due to the fact that the Exchange is aware of the time pressures under which issuers and their advisers in the debt securities market operate. It makes every effort to accommodate an issuer’s time table as it is aware that delay is a common complaint as regards other bourses. Document turnaround times are guaranteed and with commitment on both sides to expedite the listing process, it usually takes only 10 – 14 days to approve a debt listing application.

The latest addition to the Exchange’s list of products is rules governing the listing of derivative warrants and these are proving enormously successful. The first institution to take advantage of the listing procedure was Credit Agricole Indosuez which listed five issues under the W.I.Carr Developing Markets Growth Index Tracker (WIDGET) Programme.

Under the terms of the programme, Credit Agricole Indosuez may issue instruments (known as WIDGETS) relating to a specified security, basket of securities or index with respect to securities listed on markets throughout Asia

The listing fees of the Exchange for both mutual fund and debt listings are competitive with those charged by other exchanges. The lack of any requirement for a local listing agent in the case of a listing of debt securities also offers a significant cost advantage.

With its obvious advantages, the Exchange is set to consolidate its existing well established following amongst institutions world-wide.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

This article also appears in the 'International Offshore and Financial Centres Handbook 1999/2000'. For further information about this highly informative guide to offshore centres, or to order your copy, please phone +44 (0) 207 820 7733 or send an email to

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions