JERSEY: The Hedge Fund Journal- Impact of the Alternative Investment Fund Managers Directive in Jersey

Wednesday September 26 2012

The Hedge Fund Journal has published an article providing a good overview of the expected impact of the Alternative Investment Fund Managers Directive in Jersey.

Please refer to the link below for a full copy of the article:

http://www.thehedgefundjournal.com/node/8019

As one of Europe’s leading centres for alternative funds business, Jersey has been quick to acknowledge that the Directive’s reach is broad and significant for funds that are domiciled in Europe, and working to ensure it maintains a strong long-term position in supporting the hedge fund industry. As a popular jurisdiction for alternative fund structures, to do so is absolutely vital for Jersey – the current value of alternative funds administered in Jersey represents 70% of the total (£196.2 billion), with hedge funds alone making up 25% of that overall total.

The steps and timescales involved in the implementation of the Directive are complex for Jersey as a third country. However, Jersey intends to have a fully AIFMD-compliant regime ready to go by 2015. Jersey already regulates and authorises alternative fund managers in accordance with IOSCO standards, and has tax information exchange agreements in place with each Member State where alternative funds are to be marketed from 2015 – including TIEAs or DTAs with 13 Member States. In addition, Jersey is able to comply with all required international reporting and transparency requirements, and is more compliant with FATF recommendations than many onshore asset management jurisdictions. With this in mind, Jersey is confident that it will be able to satisfy the criteria needed to comply with the Directive ahead of the 2015 deadline.

Whilst there has been some speculation that the Directive may prompt a migration of fund business away from offshore to onshore centres, this is not Jersey’s experience to date or expectation at all. In fact, the Directive may present some opportunities.

The route adopted by Jersey, for example, actually offers managers a choice – of a route that is fully compliant with the Directive, and a route that remains outside of the EU. Some managers may decide that they need an onshore option but it is anticipated that they will maintain a parallel offshore one too for non-European investors. In the current climate, fund managers aren’t just focusing on Europe, they are adopting global strategies. For sophisticated Asian and Middle Eastern investors, for instance, offshore solutions will remain attractive. In addition, hedge fund managers are still showing an interest in relocating to Jersey, in spite of – and in some cases because of – the Directive. Driven also by high taxation in onshore centres, a prevailing sentiment that they are being unfairly targeted, and a desire for a high quality of living, managers consider the flexibility of Jersey’s approach to the Directive as another real attraction.

Far from being a burden, the Directive could actually pose some opportunities for Jersey as a safe environment and a ‘no-change’ solution.

Should you wish to discuss any of the matters raised above, please do not hesitate to email info@funds-axis.com