Looking at the regulation of the funds industry, there is general approval of the way the Cayman Islands Monetary Authority (Cima) has been dealing with issues.

Looking at the regulation of the funds industry, there is general approval of the way the Cayman Islands Monetary Authority (Cima) has been dealing with issues. Cima takes an open-door approach and responds proportionately and appropriately to regulatory challenges.

Cayman has full income tax transparency with the US and proactive tax reporting with EU member states. The US Justice Department has authority to conduct a criminal investigation regarding any file in the Cayman Islands since 1990.

As a full member of the International Organization of Securities Commissions (Iosco), Cayman has full regulator-to-regulator disclosure with all other members.

Cayman’s anti-money laundering legislation has been evaluated by the International Monetary Fund and by the Financial Action Task Force. It was found to be superior to that of the US and most EU jurisdictions.

Cima sits on several committees of international regulatory bodies to ensure progressive action on the issue of anti-money laundering and transparency.

Cayman was the first hedge fund jurisdiction to introduce electronic reporting and is using the information as a way to understand risks posed by funds. The regulator believes describing systematic risk, levels of leverage and liquidity and analysing qualitative and quantitative information, will be helpful for Cima and for other regulators.

The latest innovation has been the implementation of an e-business service that modernises the way regulated entities do business with Cima. Named CIMAConnect, the e-business portal enables online access for clients to complete and submit requests for Cima authorisation, along with any required documents.

The initial release of CIMAConnect, activated on October 4 2010, is for new fund authorisations. Service providers to funds are now able to apply for access to the system and once they are authorised as users, they can submit requests for the registration or licensing of new funds online. They will be able to then see when requests are accepted, track the progress of submissions and receive notification when the applications are approved.

Cayman also enjoys good relations with the US Securities and Exchange Commission (SEC) as well as the UK’s Financial Services Authority (FSA). Keeping Cayman’s rules and supervision in line with international practice is a priority for Cima. Looking at the potential response of Cima to new regulations adopted by the European Union (EU), including the alternative investment fund managers (AIFM) directive, Cima says it will not take any hasty measures and will need to understand how any laws or rules will be implemented before introducing any changes in Cayman. It is also unlikely to make legislation that may harm its competitiveness.

Cayman Stock Exchange
The Cayman Islands Stock Exchange (CSX) was established under the Cayman Islands Stock Exchange Company Law, 1996 as a private limited company. The CSX has the sole and exclusive right to operate one or more securities markets in the Cayman Islands.

The CSX is the leading offshore exchange in a North American time zone for the listing of mutual funds and hedge funds with approximately 2,000 fund listings to date.

The admission of securities to listing is governed by the exchange’s listing rules which also provide detailed requirements for continuing obligations of issuers, their enforcement and the suspension and cancellation of listing.

The CSX also has rules governing takeover bids and substantial acquisitions of shares (Code on Takeovers and Mergers) and has adopted the Model Code of Conduct for Directors, Managers and Employee Insiders.