Funds sector: A fresh challenge

Friday 5th June 2009, 3:00PM BST.

Robert Kirkby

JERSEY’S finance industry is facing a new challenge to its funds business.

The draft proposals for the European Union Directive on Alternative Investment Fund Managers, issued at the end of April, are aimed particularly at hedge funds and private equity funds.

The stated goals – part of the European Commission’s reponse to the current financial crisis – are ‘to reduce the systemic risk caused by non-retail funds’. The final form of the draft is expected by the end of the year and, if adopted, the legislation could be in place by 2012.

Jersey Finance has now commissioned a number of professional firms to carry out an in-depth analysis of the effect the proposals could have on the industry and is asking members to contribute to a ‘fighting fund’ of £150,000, to be matched by a States grant.

Robert Kirkby, technical director at Jersey Finance, said this week that the EU proposals ‘will have a material impact on all Jersey funds’, including hedge funds, property and private equity funds.

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1
Dave Stephens

June 5, 2009 at 3:28 pm

Does Jersey Finance seriously think the third party administrators we have over here for these structures will be able to contribute anything meaningful to this debate? I think they need to get the opinions of the organ grinder, not his monkey.

And yes the offshore finance centres did contribute to the increase in systematic risk of this financial crisis. Structures that were set up over here to specifically get round the prudential requirements and discipline of normal credit origination models. Rather than think of this as a threat, Jersey Finance should appreciate the level of damage that has been done by the US & UK Finance Industries and their offshore poodles and now things have to change.

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2
Pip Clement

June 5, 2009 at 6:04 pm

I think it is fair to say that long term there will be more regulation of these financial institutions and istruments.
Part of the cause of the banking collapse and the consequent credit crunch was hedge funds speculating in CDO’s, CDS’s, etc.
Most governments realise that they had a very close brush with an almost total collapse of the world financial system. In fact if it would not have been for them pumping billions of dollars in to the system we would have had a melt down worse than the 1930′s and thousands of Jersey finance professionals would now be down the job centre.

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3
Boris

June 6, 2009 at 4:51 pm

I think people should try reading the draft directive in order to understand its potential effect on the industry as a whole and the livelyhood of this island

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