In defence of Cayman’s financial services

Under a mountain of outdated caricatures and convenient omissions, Gillian Tett’s column [in the Financial Times] on global financial trends, ‘Better data on shadow banking reveals uncomfortable truths (11 Oct.), buried the conclusion that there is “no evidence” that banking practices in international financial centres such as the Cayman Islands “pose significant threats now”.

Ms Tett’s column insinuates that the Cayman Islands was among a group of “murky” and “opaque” financial centres, but the OECD’s most current assessment gave Cayman the same transparency rating as the UK, US, Germany, Canada and Australia. Also, after exhaustive consideration, the Council of the European Union assessed the Cayman Islands to be co-operative on transparency.

Cayman’s commitment to transparency and information sharing also extends specifically into the banking sector, a key focus of Ms Tett’s column. She commended efforts to produce better data on cross-border financial services but noticeably avoided mentioning that the Cayman Islands is already a significant provider of data to one of the very sources she cites, the Bank for International Settlements.

Perhaps her most significant mischaracterisation is to describe financial flows associated with international financial centres as “a mystery wrapped in an enigma for investors”. At the end of 2017, total assets managed by Cayman Islands hedge funds were US$6.93 trillion and net assets were US$4.03 trillion. The large institutional investors that invest capital on this scale don’t do so in environments that are mysterious to them. In fact, global investors understand very clearly the advantages of investing through the Cayman Islands. Cayman offers them a neutral platform in which to pool their capital with others and access a world’s worth of investment opportunities in a single transparent, tax-neutral system with a stable, democratic government and a trusted, experienced legal system.

Proponents of better data in financial services are pursuing an important goal, but they should start by being complete and accurate with the information already available.

Jude Scott
Chief executive, Cayman Finance
This letter originally appeared in the 16 Oct. issue of the Financial Times

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