Agreement paves way for marketing Cayman funds

Memorandum of understanding signed with German financial services regulator

The Cayman Islands Monetary Authority last week signed a memorandum of understanding with the German financial services regulator Bundesanstalt für Finanzdienstleistungsaufsicht, providing for mutual assistance in the supervision of alternative investment fund managers who operate in both jurisdictions. 

Without the agreement, new hedge funds that are subject to the recently implemented EU Alternative Investment Fund Managers Directive could not have been marketed to German investors.  

Although German institutional investors are not the main hedge fund investors in Europe, they place approximately half of their hedge fund allocations with funds based in the Cayman Islands, according to data service provider Prequin.  

CIMA Managing Director Cindy Scotland said, “This MOU is the latest success in our continuing efforts to secure MOUs with our European counterparts. Each MOU is a victory for the Cayman Islands hedge fund industry, as the growing collection of agreements fosters cross-border business in accordance with the [Alternative Investment Fund Managers Directive].”  

CIMA has now signed 27 memoranda of understanding with European counterparts to enable to the continued marketing of Cayman funds under the directive, which was implemented across Europe July 22. 

In order for an overseas investment fund to be marketed in the EU, the directive requires that a cooperation agreement exists between the securities regulators in the country where the fund is marketed and the jurisdiction where it is based, that this jurisdiction is not on the Financial Action Task Force ‘non-cooperative list’ and that agreements are in place for the exchange of information for tax purposes between the EU and non-EU jurisdiction.  

Italy, Slovenia and Spain are the only members of the European Securities and Markets Authority that are yet to sign agreements with the Cayman Islands. 

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