Guernsey is set to introduce a registered fund sector alongside its existing regulated sector later this year.
Registered funds would need prior approval from the Guernsey Financial Services Commission and will apply to both open and closed ended products.
Fund promoters or mangers coming to Guernsey will able to choose between regulated or unregulated vehicles depending on their investor needs, as long as they are distributing their funds to Guernsey-resident investors.
Peter Franks, financial services partner at Ernst & Young, said the more relaxed regime would be of interest to institutional investors. He explained: “This is because they do all the due diligence around the service providers and promoters for the fund. They have a lot of information to make their judgement calls on and the cost of having a regulator do that is not really of benefit to them.”
Despite the changes, Franks said more could be done to improve the funds sector in Guernsey. He added: “I would have liked to have seen more specific guidance on how Guernsey treats different types of funds. Other jurisdictions have different legislation for private equity funds, real estate funds and hedge funds rather than a generic funds law. This might slightly reduce the perception of Guernsey as a specialist player."
The changes follow recommendations from a review chaired by advocate Harwood on the legal and regulatory framework of Guernsey.
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