The Cayman Islands has a strong position globally in the administration of investment funds thanks to straightforward regulations, a legal system based on English common law and the good fortune to be in a time zone advantageous to US markets. This, along with no requirement for local directors or managers, makes the territory an attractive and flexible place for hedge funds to be domiciled.
With more than 11,000 regulated funds, the Cayman Islands has a strong funds administration sector. There are over 70 registered fund administrators licenced to operate and provide services. Their expertise, coupled with the sheer number of funds and the economy and efficiency of the regulatory system ensures the Cayman Islands remains the world’s most popular domicile for hedge funds.
International moves to strengthen laws on money laundering, terrorism funding and data protection have led to a number of legislative changes in the Cayman Islands to ensure compliance with global standards, placing greater responsibility on Cayman Islands fund administrators to ensure that funds meet new obligations as they are introduced and avoid penalties.
Coupled with this, the institutional investors’ pressure places greater demands on investment managers to keep costs down, increase transparency, produce more timely data and a higher degree of risk management.
Fund administration services play an increasingly important role as specialist providers with the necessary expertise to navigate today’s increasingly complex world of funds and their management and administration. Administrators have a critical role to play in providing specialist services that benefit investors, managers and clients while striking the right balance between the operating and reporting functions.
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