A change to Jersey's legislation will help bolster the
jurisdiction's standing as a centre for hedge fund business,
according to Jersey Finance.
The introduction of a new exemption in Jersey's Financial
Services Law, designed to simplify and encourage the establishment
of hedge fund management businesses in Jersey, was signed into law
by Jersey's Chief Minister in late November.
The change enables Jersey-registered hedge fund managers to be
regulated solely under Jersey's 'funds' regulations and
not also its 'investment business' regulations, provided
the managed accounts meet certain criteria to be 'qualifying
segregated managed accounts'.
In enabling hedge fund managers to offer managed account
services to non-fund clients alongside fund clients without the
need for further regulation, the change allows managers to benefit
from Jersey's 0% corporate income tax rate without incurring
the tax disadvantages of an 'investment business'
In order to benefit from the exemption, a managed account must
be able to meet a number of certain criteria, relating to the level
of its initial subscription, the strategies it follows, how the
assets are held in custody and the name the managed account is held
in. The manager will also have to meet a number of reporting
Geoff Cook, CEO, Jersey Finance, said:
"Jersey has a healthy and growing hedge fund sector, and
this change in legislation is expected to encourage further growth
by simplifying the framework for managed accounts whilst retaining
an appropriate level of regulation.
"In particular, it is anticipated that the exemption will
boost Jersey's appeal as a centre for facilitating the
incubation and hosting of start-up and smaller hedge fund
businesses. In addition, the change is expected to prove popular
with those Jersey managers who are seeing a rise in managed account
business where there is potential to provide investment services to
European clients without the need for AIFMD compliance."
The latest figures for Jersey's finance industry, for the
period ending September 2014, reflected a particularly strong
performance for its funds sector, with the value of funds business
in Jersey reaching the highest level in five years, with the net
asset value of regulated funds increasing by around 5.5%
year-on-year to reach just over £205 billion.
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