(Investment Business Update Special November 1996)

A distinguishing characteristic of Guernsey - which is viewed as an advantage by promoters and investors alike - is being outside the European Union. This is considered an advantage for three reasons:

1. there appears to be a trend towards EU investors preferring vehicles established in well-regulated centres outside the EU, largely due to growing concern about investor confidentiality;

2. there is concern amongst some EU regulators that the Investment Services Directive will lead to regulatory arbitrage - and in this respect Guernsey is fortunate to be in a position to determine alone who should be permitted to carry on finance business in its jurisdiction; and

3. a strong case has been made for non-UCITS funds which appeal to institutional and professional investors for which Guernsey has carved for itself a special niche.

Concerning UCITS and the competition for retail business in Europe, there is little evidence of any meaningful cross-border activity in Europe for UCITS funds - and the inordinate delay in UCITS II will limit the scope for the EC based fund management industry to develop new and appealing products. Having said that, Guernsey has negotiated reciprocity arrangements with a number of EU countries (see the separate article on page 3) and Guernsey Class A funds are becoming increasingly accepted as UCITS equivalent.

For further information contact Peter Crook on Tel: +44 (0) 1481 712 706 or fax: +44 (0) 1481 712 010 or e-mail: info@gfsc.guernseyci.com

Visit the Guernsey Financial Services Commission Web Site at Click Contact Link

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.