The Monetary Authority has updated directors on the latest local regulatory developments at a Cayman Islands Directors Association Luncheon on 24 September at the Ritz-Carlton.

The CIDA event featured a regulatory overview from the US with Herrick Feinstein Partners Irwin Latner and Patrick Sweeney and an outline of the state of discussions over the European Alternative Investment Fund Managers Directive by John Fowler, head of investment funds at Maples and Calder. However, it was Yolanda McCoy, head of CIMA’s investments and securities division, who kicked of the presentations with the latest news on planned regulations in Cayman.

CIMA statistics

She began by disclosing the authority’s latest fund statistics, stating that “as a hedge fund jurisdiction of choice our numbers remain very impressive”. As of 24 September, CIMA had authorised 9,589 funds up from 9,486 at the end of June. The total number of funds has increased for the second quarter running. The authority averaged 103 authorisations and 45 terminations over the first eight months of 2010 compared to 98 authorisations and 63 terminations over the same time period last year, she said.

Despite media coverage of a growing trend toward UCITS and funds transferring to jurisdictions such as Luxembourg, Malta or Ireland, McCoy said there is no supporting evidence for this from a regulatory point of view.

Fund administrator statistics recovered slightly from the second quarter of 2010 with 94 full fund administrators in September as opposed to 92 at the end of June, bringing the total number of full, restricted and exempted administrators to 133.

“We have observed a growing interest in the funds business and we are currently processing two full mutual fund administrator license applications,” McCoy noted.

New fund administrator category

CIMA aims to strengthen the industry further by introducing a new fund administrator category in response to demand from the private sector. The new proposed license is designed to attract small to medium or niche service companies to the Islands.

The category, approved by the CIMA board earlier this year, was considered because the Mutual Fund Law does not allow service providers to apply for a license in order to do individual components of fund administration only, such as registering and transfer agency services. The new license is aimed at RTA services by requiring only a nominal net worth, professional indemnity insurance and the obligation to have a principal office in the Cayman Islands.

Funds registration platform CIMA Connect

McCoy further outlined CIMA’s new e-business portal that will enable online access for service providers to complete and submit requests for CIMA authorisation along with any required documentation.  

The initial release of CIMA connect this month will be for fund authorisation, registration and licenses, McCoy said. “Service providers will be able to see when their requests are submitted, track the progress of their submissions and receive notification when the fund has been approved,” she explained. Service providers can connect by completing an application available at www.cimaconnect.com.

CIMA Connect aims to streamline and automate manual processes within the authority, commencing with the investment and security division. After an initial phase CIMA plans to release a schedule of functional improvements that may include online requests for changes such as entity’s name, changes to beneficial ownership, amendment to business plan, approvals for directors, senior officers and requests for financial extensions.

Access for insurance, banking, trust and company managers will be phased in at a later stage.

Amendments to mutual funds and investment business laws

Two bills, the Mutual Funds Amendment Bill (2010) and the Security Investment Law Amendment (2010), are expected to be implemented before the end of the year, McCoy said.

“The amendments will give the authority greater discretion with regards to the registration of a mutual fund or a security investment business,” she said.

Specifically it will give CIMA the extended authority to impose conditions on a registration and to refuse or cancel a registration. The amendments also require a fund to declare if a proposed operator, manager, officer, investment adviser, custodian or administrator has been prosecuted for a criminal offence, been sanctioned by a self-regulatory organisation or is not in good standing with a regulatory or self-regulatory association.

A similar provision will be extended under the Securities and Investment Business Law, McCoy said.

In addition the Proliferation and Financing Prohibition Law 2010, which is already in effect gives the authority the power to take action against persons and activities that may be related to terrorism financing, money laundering or the development of WMD.