Guernsey: Thought Leadership

Last Updated: 9 June 2009
Article by Ian Headon

Most Read Contributor in Guernsey, September 2018

Originally published in the HFM Week Guernsey Report, 2009, distributed May 2009

Ian Headon talks to HFMWeek about the role Guernsey plays in Northern Trust's global business model and the challenges in store for the hedge fund industry.

In a jurisdiction renowned for quality fund administrators, Northern Trust stands out from the crowd. Founded in Chicago in 1889, the firm traces its origins in Guernsey back to September 1972. Today, it employs over 350 people across its Guernsey business operations, making it one of the island's largest employers in the financial services sector.

As part of a global operation, Northern Trust administers hedge fund and fund of hedge funds (FoHF) assets worth $51.5bn (as of December 2008). With this in mind, Ian Headon, Northern Trust's product manager for hedge funds and FoHFs, Europe, Middle East and Africa, recently spoke to HFMWeek to give his thoughts on some of the industry's pertinent issues.

HFMWeek (HFM): Could you give us a feel for Northern Trust and its presence in Guernsey?

Ian Headon (IH): Northern Trust in Guernsey provides fund administration, custody, banking and fiduciary services to a global client base that includes hedge funds, FoHFs, private equity, real estate and infrastructure funds and traditional asset classes. This office operates as a key part of a global network spanning international offices in 15 locations in North America, Europe, the Middle East and the Asia- Pacific region.

However, perhaps the best indication of Northern Trust's position within the Guernsey hedge fund industry is provided by the highly regarded Lipper Guernsey Fund Encyclopedia. The publication recognises the firm as the jurisdiction's largest fund administrator and custodian.

HFM: What role does Guernsey play in Northern Trust's global business model?

IH: One of Guernsey's key attributes, and a significant business advantage for Northern Trust is the talent pool, enabling us to build a remarkably strong team in Guernsey, with industry leading experts in key disciplines.

Northern Trust now has over 350 people in Guernsey, many of whom have up to 20 years' experience in the industry. Our strong staff retention levels contribute to the depth of expertise and experience across the business with many of our local staff playing a leading role in managing local and global functional activities.

Another significant contribution that Guernsey makes to our global funds business is the governance culture. Thanks to our extensive client base in real estate and private equity, and the corporate secretarial and governance frameworks inherent in those strategies, Northern Trust staff are intensely focused on corporate governance.

Northern Trust is committed to providing the client, the board and investors with a world-class governance regime. For example, our private equity business is built around the collection, documentation and processing of proper instructions. This disciplined and highly controlled approach is something that we have leveraged in order to shape our approach to good governance, clear communications and robust controls.

This approach has also been applied to our FoHFs, hedge funds and other fund strategies – particularly important in this economic climate and in the light of market events. Ultimately, the Guernsey model provides the template for corporate governance structures in our funds business globally. Obviously the asset classes behave differently but the disciplined approach to governance and a robust control environment is something that informs our global funds business.

HFM: Independent administration is becoming an increasingly valued commodity. As a global asset servicing firm, are you seeing more emphasis in the current climate on independent oversight?

IH: There is nothing inherently wrong with self-administration, and the appointment of an independent administrator does not guarantee fraud prevention, but international best practice provides that the appointment of quality third-party service providers is a key part of a quality governance framework.

It remains a source of interest to us that the culture in Europe differs from that in the US. It is absolutely standard in Europe for a European-managed hedge fund to appoint an administrator whereas in the US, many funds self-administer. In that regard, it is interesting that the EU has moved ahead of its US counterparts in proposing additional regulation in the funds space.

A growing number of funds across the Atlantic are now looking to an independent administrator to satisfy investor pressure, and Northern Trust has found itself in a position to benefit. Although independent oversight must not be considered the panacea for all problems underlying the hedge fund industry today, its influence can inevitably provide a degree of comfort to investors. Our overall message is that the appointment of an external administrator will play a significant role in the industry going forward.

HFM: How have the market conditions impacted on Guernsey's hedge fund/FoHFs servicing industry?

IH: As the industry experiences increasing challenges from the global market conditions, there is an even stronger push from the institutional investors for managers to demonstrate a genuinely transparent and controlled operating environment.

Guernsey, with its long-standing background in servicing alternative investments, can demonstrate the highly established corporate governance framework and processes demanded by investors. Some of the larger service providers such as Northern Trust can offer an integrated approach to fund administration, custody and banking/secured credit needs offering a highly co-ordinated and robust approach to meeting complex day-to-day operational needs.

HFM: Is the island continuing to meet the regulatory needs of the global hedge fund/FoHF industry?

IH: Guernsey continues to innovate and evolve its regulatory environment in response to the needs of fund managers, promoters and their investors. The introduction of the 'authorised' and 'registered' fund regime increases the toolbox of options in terms of approval options and supervisory levels while building on the island's reputation as a pragmatic, funds jurisdiction.

Figures from the Guernsey Financial Services show the value of Guernsey's open-ended hedge funds/ FoHF collective investment funds industry was £29.6bn as at 31 December 2008, demonstrating how the island is now a significant global player.

HFM: What challenges lie in store for Guernsey's hedge funds industry? How will they affect Northern Trust going forward?

IH: The proposed EC directive regulating alternative investment fund managers has potential ramifications for Guernsey as a non-EU jurisdiction, presenting both opportunities and challenges. It proposes that any fund within the EU needs to appoint a trustee and administrator based in the EU as well as including some distribution limitations. The proposed directive, aimed at non-UCITS vehicles managed within the EU, is at draft stage and is still subject to amendment. It remains to be seen how the directive is shaped over the next six to nine months through negotiation and lobbying and how individual jurisdictions apply its provisions.

Regardless of the outcome, I am confident that Guernsey will continue to provide the thought leadership that has put Guernsey in the strong position it occupies today.

In terms of the alternative funds industry at large, while it has clearly been a difficult 18 months, our clients are beginning to show signs of growing confidence. In anticipation of this, the firm is continuing to invest in its hedge funds, FoHFs, private equity, infrastructure and real estate servicing operations in Guernsey. For this reason, I expect Guernsey to continue to remain at the very centre of Northern Trust's global fund strategy for many years to come.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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.

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

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

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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