HFMWEEK SPECIAL REPORT 2016

FLEXIBILITY Adapting to the needs of the industry COOPERATION Working to create a stronger jurisdiction SKILL Availability of expertise and services

FEATURING Argon Financial // GFIA // Gibraltar Finance // Gibraltar Exchange // Hassans // ISOLAS // Nexus Fund Administration

GIBRALTAR 2016 INTRODUCTION

Published by Pageant Media Ltd

LONDON Third Floor, Thavies Inn House, 3-4 Holborn Circus, London, ibraltar’s as a European finance centre EC1N 2HA continues to evolve and develop as a true alternative T +44 (0) 20 7832 6500 within Europe. Jurisdictions across the world are now NEW YORK adapting or introducing legislation that seeks EU 200 Park Avenue South Suite equivalence, attempting to secure EU access from a 1603, NY 10003 fund distribution or investment services perspective. T +1 646 891 2110 Gibraltar is a fund and investment services domicile providing a European passporting solution and access REPORT EDITOR within an EU compliant framework. Mike Sheen Changes to regulatory frameworks across multiple jurisdictions seeking T: +44 (0) 20 7832 6628 equivalence are important, but ‘third country’ access to Europe in respect of [email protected] G AIFMD or MiFID II is far from clear. What the changes show is that there will HFMWEEK HEAD OF CONTENT continue to be less and less regulatory arbitrage between different jurisdictions Paul McMillan and a narrowing gap between non-EU and EU jurisdictions in this respect. T: +1 646 891 2118 Gibraltar offers a secure, safe and typically low-cost jurisdiction that keeps [email protected] complying with the full weight of European regulation, which can enhance from the full range of benefits. Consider the A.M. Best country risk tier for HEAD OF PRODUCTION Gibraltar, which provides a CRT rating of one and a better rating than many Claudia Honerjager other international finance centres. This rating denotes the lowest possible level of economic, political and financial system risk. SUB-EDITORS Luke Tuchscherer, Mary Cooch, Alice Also consider Gibraltar’s OECD report on transparency and exchange of Burton, Charlotte Romeyer information where the city received the same largely-compliant rating as the UK. This is of course critical to Gibraltar’s future and being on the front foot in GROUP COMMERCIAL MANAGER terms of compliance and international standards has been a strategic direction. Lucy Churchill This means Gibraltar is able to offer a European, fully-compliant framework, T: +44 (0) 20 7832 6615 within a VAT exempt territory and extremely competitive rates of individual [email protected] and personal tax. This is backed by a pro-active and engaged regulator, which has also been heavily invested in over the last few years. HEAD OF BUSINESS DEVELOPMENT The Gibraltar Finance Centre also strongly supports and assists the Gibraltar AMERICAS Tara Nolan Funds and Investments Association (GFIA) and the Gibraltar industry in its T: +1 (646) 891 2114 efforts to develop the city in this space. Recent trips to Singapore, Hong Kong [email protected] and Geneva are beginning to bear fruit as managers start to plan for the - term. Meanwhile Swiss managers begin to see the changes to their own asset PUBLISHING ACCOUNT MANAGERS management industry, placing the classic independent asset manager model Amy Reed under regulatory pressures for the first time. These managers are not necessarily T: +44 (0) 20 7832 6618 able to secure access to the EU under third country provisions provided by [email protected] MiFID II, which will introduce additional requirements before they are able to Alex Roper offer their services in Europe. Gibraltar offers a tried and tested solution, which T: +44 (0) 20 7832 6594 [email protected] is likely to be faster and cheaper to establish and operate. David Butroid Similarly, in an AIFMD context Gibraltar can act not only as a domicile for +44 (0)207 832 6613 the AIFM and the AIF, but is also one of the few smaller jurisdictions that has [email protected] a selection of AIFM depositaries based within the jurisdiction to service such AIFs. Something that will become a requirement from 2017. CONTENT SALES Gibraltar continues to offer a very strong value proposition and, as an Tel: +44 (0) 20 7832 6511 association, GFIA continues to evolve and support the growth of the industry. [email protected]

CEO Charlie Kerr Joey Garcia Chairman, Gibraltar Funds & Investments Association, for and on behalf of the GFIA Executive: James Lasry, Moe Cohen,

HFMWeek is published weekly by Johann Olivera, Benjy Cuby, Carlos Martins, Jay Gomez, Jordan Pageant Media Ltd ISSN 1748-5894 Ramagge. Printed by The Manson Group © 2015 all rights reserved. No part of this publication may be reproduced or used without the prior permission from the publisher

HFMWEEK.COM 3 GIBRALTAR 2016 CONTENTS

PRIME BROKERAGE FINANCIAL SERVICES 06 PRIME BROKER REPRICING PRESENTS 14 A SOLUTIONS-DRIVEN JURISDICTION OPPORTUNITIES FOR SMALLER PROVIDERS Jonathan Garcia, senior associate at ISOLAS, explains how Simon Brown, CEO of Argon Financial, talks to HFMWeek about the Gibraltar’s fund industry is serviced with flexibility and competence impact of prime broker repricing and what Gibraltar has to offer the industry FINANCIAL SERVICES 17 EU ACCESSIBILITY: EXCHANGE TRADED LEGAL INSTRUMENTS 08 BUILDING A PASSPORTABLE EUROPEAN FUND Philip Young, marketing director of GSX Limited, explains the variety James Lasry of Hassans talks to HFMWeek about the realities of and versatility the Gibraltar can offer marketing hedge funds in Europe and how marketing needs affect your choice of jurisdiction ACCOUNTING 20 CONTINUED GROWTH FINANCIAL SERVICES Moe Cohen, CEO of Benady Cohen & Co Group, Chartered 11 MAINTAINING A STRONG JURISDICTION Accountants including Nexus Fund Administration, talks to Philip Canessa, senior executive at Gibraltar Finance, talks to HFMWeek about the growth of Gibraltar’s fund industry and what HFMWeek about how Gibraltar supports its hedge fund industry the jurisdiction has to offer funds

4 HFMWEEK.COM When it comes to funds...

...Hassans leads the way

International Lawyers

In recent years, the fund industry in describe the department as a “Rolls-Royce Gibraltar has seen rapid and impressive investment funds practice...led by James growth. Gibraltar is now a serious option Lasry, a leading investment funds lawyer for individuals and companies considering with first-class knowledge of the local where to base investment funds. and wider market”. (EMEA 2014 Edition) Hassans has been at the forefront of this Hassans is fundamental to any fund being development and in 2004 became the first firm in Gibraltar to set up a funds practice, set-up in Gibraltar whether Private, EIFs, quickly establishing itself as the “go to” firm. Non- UCITS Retail Funds, UCITS Funds or Protected Cell Companies. Hassans is ranked as the sole leader for Investment Funds by Legal 500 and EMEA Hassans - 75 years in Gibraltar.

TAX PLANNING • CORPORATE & COMMERCIAL • FINANCIAL SERVICES • FUNDS • LITIGATION • PROPERTY • TRUSTS www.gibraltarlaw.com 57/63 Line Wall Road, PO Box 199, Gibraltar. +350 200 79000 • +350 200 71966 • [email protected] GIBRALTAR 2016

PRIME BROKER REPRICING PRESENTS OPPORTUNITIES FOR SMALLER PROVIDERS

SIMON BROWN, CEO OF ARGON FINANCIAL, TALKS TO HFMWEEK ABOUT THE IMPACT OF PRIME BROKER REPRICING AND WHAT GIBRALTAR HAS TO OFFER THE INDUSTRY

HFMWeek (HFM): Th ere is a growing trend of prime And in many cases an increasing trend has emerged of broker repricing occurring at the moment and costs prime brokers kindly asking funds and other corporates to are increasing as a result. What do you see at the main look for alternative prime broker relationships. cause of this trend? Th is problem is tough enough if you are already a client Simon Brown (SB): Undoubtedly, the primary cause of of one of the larger prime brokers. New applicants are of- this trend of prime broker repricing is the Basel III regu- ten asked to jump through many more hoops before their Simon Brown is latory framework on bank capital application is considered, with CEO of Argon Financial. adequacy, stress testing and mar- minimum balance sheet require- His career in the financial ket liquidity risk. Th is framework ments of more than $20m not un- markets has spanned contains a set of buff ers, capital common. almost three decades. He and liquidity ratios, which have ef- IN RESPONSE TO THE worked for 12 years as a fectively made it more expensive HFM: Do you think fund man- derivative trading specialist for the banks to conduct prime FRAMEWORK OF BASEL agers will begin to look to alter- in London followed by brokerage business; typically pro- native providers in an eff ort to 17 years building trading viding fi nancing, custody, securi- III, THE BANKS HAVE BEEN lower costs? and agency businesses ties lending, capital introduction, SB: Large bank prime brokers servicing institutional, trading systems and access to REVIEWING ALL CLIENT may fi nd themselves in a situation corporate, hedge fund and markets. Th e key reason for the where they can no longer justify high-net-worth clients. implementation of these require- ACCOUNTS TO EVALUATE providing prime broker services to Simon founded one ments and ultimately the scenario smaller funds. As a result, the mar- of the first institutional that many smaller funds and other WHETHER THEY CAN ket has opened up for smaller prime electronic derivative broking corporates are now facing, is the brokers (mini prime or prime of businesses and has been type of bank trading that occurred JUSTIFY THE RETURN ON prime), who may not be burdened CEO of Argon Financial for up to 2008/09, which in turn was by legacy technologies/systems eight years. a catalyst to the systemic collapse EQUITY (RoE) FROM THOSE and high fi xed costs, with many and banking crisis. boutique operators choosing a vari- It is important to remember that ACCOUNTS. REPRICING HAS able cost operational model. Th ese the banking crisis was not just a mini prime operators can therefore capital issue, it was a liquidity is- BEEN JUST ONE OF onboard the smaller clients as they sue as well. As a result liquidity has do not have the high fi xed costs or become the focus for regulators, THE CHOICES FOR the extent of capital and leverage particularly those in Europe, in constraints that the larger ‘bank’ an eff ort to ensure that a systemic INCREASING RoE prime brokers may have. crisis will not occur again. Balance Th ere is no doubt that if exist- sheet effi ciency is now a main fo- ing large prime brokers have been cus for the banking industry with making noises about account re- this focus precipitating in the large views to their clients, these funds prime brokers becoming more selective in who they seek” and other corporates have been looking for alternative and keep as their clients. options for execution, lending, sett lement and custody. In response to the framework of Basel III, the banks have Th ere are also instances where medium-sized funds are been reviewing all client accounts to evaluate whether they coming under pressure from their prime brokers and this can justify the return on equity (RoE) from those accounts. pressure is unlikely to subside in the near future, given the Repricing has been just one of the choices for increasing increased level and cost associated with the regulatory en- RoE. Some banks have also introduced minimum monthly vironment and reporting requirements. fees for clients, or even both monthly fees and repricing. Gone are the days where banks would do their upmost

6 HFMWEEK.COM PRIME BROKERAGE

to onboard any size fund to increase their client account the larger banks have, it is able to onboard and service these quota in the hope that those applicants would grow to be- funds and other corporates. That is not to say mini primes come large hedge funds. do not conduct similar KYC onboarding processes as the banks, but they may not have the extent of bureaucracy and HFM: How are smaller prime brokers able to provide administrative processes that the banks have, and are there- their services to funds at a lower cost than larger firms? fore able to process applications more efficiently. SB: All large ‘bank’ prime brokers are subject to As long as mini prime brokers are able to fill the all of the new capital and liquidity ratios imple- gap providing prime broker services to the small- to mented under the Basel III framework. Liquidity medium-sized funds and brokers, which may oth- constraints for these large banks result is less capi- erwise fail to reach the bar set by the larger prime tal being available for their clients. However, there AS LONG AS MINI PRIME brokers, the fund industry can continue to grow. are some smaller tier one operators (investment However, without the participation of mini prime firms) who have the permissions and capability BROKERS ARE ABLE TO FILL brokers, new entrants to the market may struggle to to offer small-to medium-sized funds and brokers find adequate execution and settlement services by execution, clearing, lending and custody services, THE GAP PROVIDING PRIME which to operate. without the burden of the cost-base and liquidity constraints that the larger prime brokers are sub- BROKER SERVICES TO THE HFM: Why is Gibraltar an attractive jurisdic- ject to. tion for the hedge fund industry? These mini prime brokers are therefore filling an SMALL- TO MEDIUM-SIZED SB: Argon Financial was founded and incorporat- important gap in the prime broker market, provid- ed in Gibraltar, simply because Gibraltar is a great ing key execution and custody services to the small FUNDS AND BROKERS, place to do business. Gibraltar offers a robust regu- funds and corporates who would otherwise be un- latory structure governed by the Financial Services able to operate in these markets. WHICH MAY OTHERWISE Commission, with passporting capabilities into the rest of Europe. The Financial Services Commis- HFM: Do the large prime brokers welcome FAIL TO REACH THE BAR sion is structured to regulate investment firms (like volume aggregators such as Argon Financial? Argon Financial), banks and funds, among others; SB: Absolutely. Even though the larger prime bro- SET BY THE LARGER PRIME with the Experience Fund (EIF) structure kers may be unable to onboard and/or facilitate seeing strong growth since its inception. services for many funds and other corporates, they BROKERS, THE FUND The Gibraltar funds industry also benefits from are still able to benefit from the volume when ag- the recently set up Gibraltar Stock Exchange where gregated by a mini prime broker. In this instance INDUSTRY CAN CONTINUE funds can be publicly listed, regardless of size. If a the mini prime aggregator incurs the cost of on- fund wants an EU listing the GSX provides the boarding and administration of multiple small TO GROW platform for them to do so. clients, while still facing the prime broker as one Gibraltar’s finance centre offers a well-regulated, corporate omnibus account. transparent and internationally cooperative juris- Among other roles, Argon Financial is one such diction. Although Gibraltar is relatively small, it is mini prime broker. It has an extensive network of able to punch above its weight as a centre for finan- relationships with many of the large bank prime ” cial services and does an excellent job of providing brokers. As a smaller firm, without some of the constraints services to firms operating within its shores. Q

HFMWEEK.COM 7 GIBRALTAR 2016

BUILDING A PASSPORTABLE EUROPEAN FUND

JAMES LASRY OF HASSANS TALKS TO HFMWEEK ABOUT THE REALITIES OF MARKETING HEDGE FUNDS IN EUROPE AND HOW MARKETING NEEDS AFFECT YOUR CHOICE OF JURISDICTION

HFMWeek (HFM): What are the key challenges faced dictions that are as close to Cayman in terms of its regula- by hedge funds marketing themselves in Europe? tory structure as possible, while still being in the context James Lasry (JL): AIFMD has fundamentally changed of the EU. the way in which hedge funds are marketed in Europe. In When you consider common law, the prevalence of the the past, in order to be able to promote a fund to European English language, ultimate appeal to the Privy Council and you had to rely on questionable doctrines such a regulatory philosophy similar to that of the Cayman Is- as reverse solicitation. Th ese days, regimes have changed. lands that allows you to launch a fund before you receive Th is means that you must rely on national private-place- regulatory approval, Gibraltar checks all of these boxes. ment issues, which are now standardised among Euro- Gibraltar is the closest jurisdiction to the Cayman Islands, pean jurisdictions. Alternatively you must have a way of in terms of regulatory experience, that one is likely to get James Lasry is head of marketing funds throughout Europe. Th is is something within the context of the EU. It also of course provides the funds at Hassans Law Firm. that AIFMD can off er by way of the European Marketing ability to passport throughout the EU. He has been instrumental Passport. Th e industry is probably insuffi ciently aware of the in setting up many of At AIFMD’s inception, the industry started looking at speed-to-market capabilities of launching inherent in the Gibraltar’s funds, including doctrines such as reverse solicitation. Th e industry has process of launching a fund in Gibraltar. For example, in the first Experienced Investor moved on in this respect. Th e dis- Gibraltar you can establish your Fund (EIF) and Protected cussion that occurs now is primar- funds in as long as it takes to draft Cell Company (PCC) Fund ily around national private-place- the documentation and open the and advises the govern- ment regimes. various bank and brokerage ac- ment of Gibraltar on funds Some thought is being given counts. You are then able to launch legislation. to using the marketing passport GIBRALTAR IS THE CLOSEST the fund aft er just 20 days of notifi - of AIFMD. But in my view, not cation from the regulator. Th is fund enough thought is being given in JURISDICTION TO THE will be passportable throughout the this regard. Th is is because the EU. In contrast, in other jurisdic- perception has been that compli- CAYMAN ISLANDS, IN tions you would have to potentially ance with AIFMD doesn’t bring a wait signifi cant periods of time for lot of value to investors, but brings TERMS OF REGULATORY that fund to become authorised in a lot of cost and regulatory bur- its own right, which is in addition den. However, there are two big EXPERIENCE, THAT ONE IS to authorisation of AIFMD itself, surprises with AIFMD: First, com- before you can begin trading with pliance is not nearly as diffi cult as LIKELY TO GET WITHIN THE that fund. My estimation is that this was feared. Second, the national process would take six weeks at the private-placement regimes have ac- CONTEXT OF THE EU very least, and potentially several tually been tightened, in many in- months to complete in other Euro- stances, well in advance of the 2018 pean jurisdictions. deadline imposed by the directive. Furthermore, the costs in Gi- So with these regimes, by and large, ” braltar are signifi cantly lower than being diffi cult to comply with (with the notable exception in other European jurisdictions. It is possible to set up a of the UK), it would stand to reason that managers that fund with much lower AuM than would be viable in these wish to market into the EU should consider a passportable jurisdictions. vehicle. HFM: What is Hassans role in helping its clients over- HFM: Which of the European jurisdictions should one come the challenges associated with marketing a fund use in order to have a passportable fund? in Europe? JL: Most of the industry has been used to jurisdictions like JL: First of all, we help by identifying the client’s invest- the Cayman Islands. It would stand to reason, therefore, ment and marketing needs. We advise clients on the most that rather than going to jurisdictions that have very diff er- appropriate regulatory regime for them to meet those ent regulatory philosophies, funds should operate in juris- needs.

8 HFMWEEK.COM LEGAL

HFM: What role has Hassans played in advis- AIFMD because it is such a fundamental change ing the Gibraltar government on new laws? in the way funds are managed. Hedge funds and JL: Just over 10 years ago, my colleagues proposed WITH TIME THE INDUSTRY private equity funds are now obligated to create or the Experienced Investor Fund (EIF) legislation to employ an AIFMD manager, which in many ways the government. This proposition was reviewed by WILL BECOME MORE is analogous to a Ucits. This is not necessarily ful- the Finance Centre, the regulator and the govern- filling an investment manager role that it used to ment. In what is a tribute to the open-mindedness COMFORTABLE WITH BOTH before the directive. Because of this, much of the of this small jurisdiction, this legislation became industry seem to be clinging to the old ways of law within 12 months of the original proposition. In THE REQUIREMENTS AND structuring funds and using the same jurisdictions legislative terms, this is just about the speed of light. as they used to before the directive. This is possible because of the close relationship ADVANTAGES PRESENTED I think that with time the industry will become that exists between the government, the regulator more comfortable with both the requirements and and the industry in Gibraltar. In fact, the industry BY AIFMD WITH REGARD TO advantages presented by AIFMD with regard to since then has become much more galvanised. passporting rights. This is particularly relevant in This can be seen through the work of the Gibraltar PASSPORTING RIGHTS the respect of the narrowing and closure of private- Funds & Investments Association. This three-part placement regimes, as well as the possible opening relationship has become that much stronger as a up of passporting to third jurisdictions. I think the result, which allows for innovation and prudent AIFMD will become the norm for marketing into regulation. Europe. It has taken time, but the industry will ” adapt. When it does, jurisdictions like Gibraltar that offer HFM: How do you expect the hedge fund industry to very competitive solutions as a result of not ‘gold-plating’ develop in the years ahead with regard to AIFMD? the directive, will become a much more prevalent and pop- JL: The industry has found it difficult to get to grips with ular fund jurisdiction. Q

HFMWEEK.COM 9

GIBRALTAR 2016 FINANCIAL SERVICES

MAINTAINING A STRONG JURISDICTION

PHILIP CANESSA, SENIOR EXECUTIVE AT GIBRALTAR FINANCE, TALKS TO HFMWEEK ABOUT HOW GIBRALTAR SUPPORTS ITS HEDGE FUND INDUSTRY

HFMWeek (HFM): How has Gibraltar’s hedge fund Our EIF is a very flexible and attractive vehicle with industry developed over the past decade? a number of key advantages such as a pre-launch ap- Philip Canessa (PC): We introduced the Experienced proval process, competitive start-up costs, it can be Investor Funds (EIFs) regime in 2005 and since its intro- self-managed and it is tax neutral. duction it has been the main driver of growth of our fund Our regulator, the Gibraltar Financial Services industry. The EIF has proved to be an excellent vehicle Commission, currently have around 200 regis- for the establishment of hedge funds. This has become tered EIFs, including sub-funds with investment more significant since the introduction of the AIFMD, as strategies, which include securities, mixed strategies, EIFs may be operated as a compliant Alternative Invest- fund-of-funds, real estate and private equity among ment Fund under AIFMD. others.

HFMWEEK.COM 11 GIBRALTAR 2016 FINANCIAL SERVICES

HFM: What does Gibraltar ensure are effi cient and cialist skills (HEPSS) scheme, for individuals who have appropriate regulatory framework? skills or experience that are not available in Gibraltar, and PC: We have a forward-looking and eff ective regulator deemed necessary to promote and sustain economic ac- that treats the fi rms it authorises and supervises in the tivity of particular economic value to Gibraltar. same manner as the private sector fi rms treat their clients. Th ese individuals must also have approved residential Th is means being fast and responsive. Th ere are many accommodation in Gibraltar. Th e HEPSS could be the jurisdictions in Europe, let alone outside Europe, where CEO or chief investment offi cer of a hedge fund man- the regulator is able to deal with the applications at what- agement fi rm and, under this scheme, the individual’s ever pace it wishes and is not accountable to anyone. personal tax would be capped at approximately £30,000, We do not believe that this should be the case. We providing the individual’s earnings are in excess of Philip Canessa joined have invested heavily and worked £120,000 p.a. Gibraltar Finance as senior very hard with our regulator to finance centre executive, ensure that it is delivering speed HFM: How important is Gibral- focusing on the development to market. Th at is of fundamental tar’s position as an EU domicile of the funds and asset importance in fi nancial services in THE FUNDS INDUSTRY in appealing to hedge funds? management sectors, in today’s world. PC: Th is is extremely important which he has more than What we expect from our regu- IS SUPPORTED BY and more so following the trans- 30 years of experience. He lator is a fast, responsive and effi - position and introduction of the was managing director of cient service to license fi rms, not HIGH QUALITY SERVICE AIFMD. Gibraltar is within the an investment firm for 11 just in the application process but European Union and can there- years and also served as a in the general regulatory approach PROVIDERS. WE HAVE fore passport its fi nancial services board director in different and environment. throughout the EU. jurisdictions. As a small jurisdiction we all BANKS, WHICH ARE As an example, a non-EU man- work together; the regulator, the ager wanting to market their ser- government and the industry pro- LICENSED DEPOSITARIES vices or raise capital within the EU, fessional to achieve this aim. could set up in Gibraltar and pass- AS REQUIRED UNDER THE port its services from the Gibraltar HFM: What are the tax advan- fi rm to the rest of the EU. tages of operating a fund in Gi- AIFMD AND 10 LICENSED Th is advantage obviously does braltar? not apply solely to non-EU manag- PC: If we talk about the EIF, FUND ADMINISTRATORS ers. A start-up manager from the which is the fund vehicle for UK could also use Gibraltar to set hedge funds, these funds are tax up and take advantage of the costs neutral. Th is means that the EIF and effi ciencies associated with itself does not pay tax. a small jurisdiction, but having Th e tax advantages, however, can also be enjoyed by” all the benefi ts of a familiar legal and regulatory system the regulated AIFM or investment manager and by cer- within a high quality infrastructure and a good quality of tain individuals working for the regulated fi rm. The cor- life. porate tax rate chargeable on taxable profi ts of the fi rm is 10% and the eff ective rate of income tax for individuals HFM: How else is Gibraltar able to support funds in- is 25%. dustry? Th ere is a scheme, the high executive possessing spe- PC: Th e funds industry is supported by high quality ser- vice providers. We have banks, which are licensed deposi- taries as required under the AIFMD and 10 licensed fund administrators.

HFM: How do you expect Gibraltar’s fund industry to develop in the decade ahead? PC: We are very confi dent our funds industry will de- velop in a very positive way in the decade ahead. We have been very active in raising the profi le of our jurisdiction and in informing professionals in diff erent geographical areas about our funds regime. As part of this strategy, for example, we visited Singa- pore and Hong Kong in July of this year, where we hosted events, together with a delegation of fi nancial services professionals from Gibraltar, and explained the benefi ts of using Gibraltar and what it has to off er. We are also focusing our business development pro- gramme in London and Switzerland, our traditional tar- get locations, and are certain that this will develop suc- cessfully for us. Q

12 HFMWEEK.COM SUBSCRIBE TO

24 Sep 2015 ISSUE 393

THIRD POINT www.hfmweek.com RULING SPARKS CALLS FOR REFORM 21 03 MANAGERS WANT “OUTDATED of it ANALYSIS LAUNCHES RULES” CHANGED and the long The 09 REGULATION DAVIDE SERRA’S ALGEBRIS EXPANDS PRODUCT RANGE 10 Financials specialist opens global diversifi ed Ucits LAUNCHES MORE CTAS AND CPOS MUST JOIN NFA AFTER CFTC RULING Regulator to force swaps-only funds to join association

EX-HIGHBRIDGE AND BLUE RIDGE PROS PREP L/S EQUITY FUND Jim Glynn and Nicholas Danaher to start Domando by year-end Mifid II delay likely THE REGULATORS as Esma considers GOING HEDGE one-year delay. Under Esma’s proposed FUND NATIVE softening rulesadvice, commission sharing agreements (CSAs) would not Managers back implementation be acceptable and managers postponement imple- would need to pay for research BY SAM DALE directly or through poll a ring-shows fenced account.HFMWeek THE DEADLINE FOR An The menting controversial partslong andof the 76% of managers support a research highlights the

THE BEST Mifid II could be delayed beyond shortdelay to the directive, with 17% of it HFMWeek January 2017 as Esma prepares under- wanting to go ahead as planned to water down theCF proposed PARTNERS ban HIRES CIO AHEAD OF EVENT-DRIVEN LAUNCH FundHFMWeek structure moves fromand RS Platou7% believing Asset Management delays should large numbers of ex-regulators who 16 on dealing commissions to pay only come if there are major for research, changes. www.hfmweek.comhave walked through the revolvingANALYSIS stands. HEDGE FUNDS BACK EC ACTION“There ON WITHHOLDING is clearly a lot of TAX appe- RELIEF The directive, first floated in door to work for hedge funds Cross-border lending hurdles to be removed,tite for it toleaked be delayed,” plan suggests said Nick 2010, includes an overhaul of Colston, partner at Simmons 14 managers’EX-ABYDOS commission COO PREPSarrange- GLOBALand MACRO Simmons. FUND “The LAUNCHESlatest ISSUE 394 05 ments,Paul Brunsden transaction founds Ironwallreporting Capital Managementrumour is that parts of the imple- 1 Oct 2015 03 and recording requirements. mentation could be delayed with 09/2015 17 It is understood the European 22/ most brought in by TAX LONDON KEEPS Commission is considering a January 2017.” 07 delay as commission propos- CALLING als have been caught up in LAUNCHES Brevanpolitical wrangling. Howard’s The UK’s 11 Investment Association wants a HFMWEEK Argentina THE fund CHANGING WORLD OF HEDGE FUND ADMIN DELOITTE’S CHRISSPEAKS FARKAS TO assetsCOMMENT near $500m ANALYSIS r indd 1 Fund one of a number 16 looking to take advantage of opportunities in the region BY BENJAMIN JAGLOM Stanley’s fixed income division GET 8 Oct 2015 and an analyst at Deutsche Bank. ISSUE 395 BREVAN HOWARD HAS There are currently 12 raised nearly $500m for its spe- Argentina-focused hedge funds, READ IN THE cialist Argentine fund that invests READY according to figures from Pre- in a mixture of equitiesSEC TURNSand qin, UP with a total of $878m of bonds, assets, plus a number of other www.hfmweek.com HFMWeek The $27bn Jersey-basedCYBER-SECURITY hedge funds with exposure to FOR A understands. firm launched the vehicle last the country as part of emerging December, according to SECHEAT fil- market strategies. 21 07 ings, with the open-ended fundTHE REGULATOR GETS of it UCITS A number of Argentina-ANALYSIS REVOLUTION short invested in a mixture of sover-SERIOUSfocused ON hedge TECH funds CRIME have and the long eign debt and equities, according launched in the past year as The 10 to reports at the time. firms bet on an improving eco- LAUNCHES The fund, which is understood nomic climate. Presidential to have $448m in AuM, is run by AMUNDI EYES UCITS PLATFORM START DATE IN 2016 elections take place next month portfolio11 manager Ben Melkman, and experts suggest the nation Private banking clients push for fund vehicle LAUNCHESa partner who has been with the will resolve its differences with firm since 2009. Prior to this he holdout creditors who did not HFMWeek EX-DAIWA CHIEF ECONOMIST PREPS DEEPWATER worked as a director in Morganaccept the terms of previous looks at the new recording China-focused fund receives seeding from Westpac subsidiary debt restructurings and have requirements ushered in by Mifi d II been pushing for a full and why some hedge fund fi rms QVT SPINOUT PORTSEA EYES DECEMBER TAKE-OFF COMMENT payout on their bonds. Firm led by de Weck and Spoljaric expects $50m day-one capital HOW EU REGULATION IS CHANGING SERVICE PROVIDERremain RELATIONSHIPSunprepared 03

001_003_HFM394_cover.indd 1 ANALYSIS HEDGE FUND Ex-Ziff Bros sector 19 head to launch l/s Through a Cayman master/ 14 The feeder structure, Sunriver will long equity fundand the run a fundamental equities strat- short of egy,it buying “high-quality compa- Will Cook teamsNEW with TAGES former CAPITAL JAT CEOnies” UNVEILS that are temporarilySEEDING PLANS marked 29/09/2015 17:01 Capital CFOOver to set$600m up Sunriverwill be put to workdown next yearbut cansays outperform Jamie Kermisch as mar- Management ket concern fades, and shorting www.hfmweek.com Brothers sec- “lower quality companies” that BY JASMINDYAL LEITNER CAPITAL ACQUIRES STAKE IN CHENAVARI have long-term business issues London manager is latest to sell equity to private equity fund A FORMER ZIFF overlooked by the market. ISSUE 396 tor head is planning to launch a The strategy willSEEDING invest pri- 15 Oct 2015 has learned. 05 takes a look at the biggest long/shortACADIAN PREPSequity SYSTEMATIChedge fund, LONG/SHORTmarily in EQUITYpublicly FUNDtraded US BostonHFMWeek manager to launch strategy after $50m commitment Will Cook registered Stam-equities, but may also trade in HFMWeek UNUSUAL FUND 16 common or preferredINVESTMENT , ford, Connecticut-based Sunri- 07 prospects for nextEXPENSES year from funds HFMWeek sovereign and corporate debt, ANALYSIS ver Management with the SEC bonds, convertibles, derivatives in June this year and plans to or commodities.LAUNCHES registered in the last 12 months launch by year-end, 11 INVESTOR CONCERN OVER Relational duoCook set spent over 10 years HFMWEEK/CONVERGENCE14 understands. Cook has lined up working for Ziff Brothers Invest- former JAT Capital Management ments, the Ziff family’s internal, RESEARCH 03 CFO Justin Morgan to take on multi-billion-dollar hedge fund, INDUSTRY to launchthe same role at Sunriver, activist regula- 06/10/2015 which closed down at tory filings indicate. understands a HFMWeek the end of 2013. ANALYSIS 19 hedge numberfund of other staff could also DON’T BELIEVE THE join Sunriver from an affiliated John Sullivan and Jay Winshipfamily office. to lead new San Diego-based THE IMPACT OF BREXIT ON THE UK HEDGEPOLITICAL FUND SECTOR HYPE venture COMMENTutives may launch a new fund BY JASMIN LEITNER using Relational’s name. TWO RELATIONAL The fund, which is likely to have onshore and offshore ver- INVESTORS sions, will seek “to generate planning to launch an activ- principals are excess performance by proac- ist hedge fund early next year, tively engaging management HFMWeek understands. teams, board members and John Sullivan and Jay Winship other constituencies to accom- have set up San Diego-based plish positive change intended ActionView Capital and are aim- to increase shareholder value”, ing to launch the ActionView the document said. Capital Fund I early next year, a marketing document seen by ActionView Capital Fund I will take a three- to five-year HFMWeek indicates. horizon to invest in a concen- $6bn Relational started trated portfolio of underper- winding down last year after forming or out-of-favour com- co-founder Ralph Whitworth panies with strong cash flows had to step back on account of Despite the hedge fund-bashing from sound core businesses. health issues, with some reports headlines, experts say the policies of indicating at the time that exec- The strategy will focus on mid-cap companies and take between eight and Republican frontrunners would be a COMMENT 15 positions, starting boon for the sector NAVIGATING THE COMPLEX MAZE OF03 RESPONSIBLE INVESTING

001_003_HFM396_News.indd 1 ANALYSIS 16

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A SOLUTIONS-DRIVEN JURISDICTION JONATHAN GARCIA, SENIOR ASSOCIATE AT ISOLAS, EXPLAINS HOW GIBRALTAR’S FUND INDUSTRY IS SERVICED WITH FLEXIBILITY AND COMPETENCE

ibraltar’s burgeoning fi nancial services Irrespective, managers licensed and regulated under Gi- sector dates back to 1967, when provi- braltar law are taxed in Gibraltar on their profi ts. The sions for a special tax regime for interna- standard rate of company tax is 10%. Funds are generally tional business were made. Th e industry structured to be tax-neutral. Th is can be achieved in two has made great strides since those early possible ways: days, transitioning into an “onshore” Eu- • Th e fi rst is by obtaining a certifi cate from the commis- ropeanG fi nancial services centre, with numerous benefi ts sioner of income tax for an exemption on tax on invest- for funds and managers. ment income to be granted. Under this certifi cate the Gibraltar’s vantage point over the Western Mediter- fund is not subject to corporate tax on invested income. ranean, known as the meeting place of continents, and • Th e other option is to elect to be taxed under Gibral- Jonathan Garcia is its subtropical climate, are not the only factors att racting tar’s corporate tax regime, which is unlikely to result in a senior associate within fund and fund managers to the British territory. Gibraltar’s tax liabilities unless the fund is investing in physical as- the Funds and Investment regulator, the Financial Services Commission (FSC), has sets located in Gibraltar. Services Team at ISOLAS. a strong history of delivering eff ective regulation that is He advises on a wide modern and effi cient, operating to defi ned standards. eTh EMPLOYEE BENEFITS array of fund structures FSC, with the full support of the , Incentives also exist for employees of fund managers. and solutions and is is implementing a strategic plan with the objective of oper- Th ose who meet certain criteria can avail themselves of the also routinely involved in ating in a professional and proportionate manner. Th e FSC High Executive Possessing Specialist Skills (HEPSS) sta- assisting investment firms is concentrating on the issues that matt er most, working tus and will only be taxed on the fi rst £120,000 of earned to become authorised in to respond in shorter timescales and minimising the bur- income, which at the current rate of income tax caps their Gibraltar. He is ranked as an den and cost of compliance, while delivering these changes tax at around £30,000. Gibraltar does not tax investment ‘up and coming’ practitioner with “business as usual” delivery. Th e FSC provides clear income, there is no capital gains tax, no wealth tax, no in Chambers Global 2015, process and set timeframes for approval of applications inheritance tax and the territory is excluded from the re- having attracted praise for and has recently established service standards shorter than quirement to levy VAT, despite being in the EU. Territories his work on structuring of that stated in legislation. Th is will such as Malta, Dublin and Luxem- investment funds. further streamline the application bourg for example, all levy VAT. and regulatory processes for ap- Th rough tax information ex- plicants. change agreements being entered SERVICE-DRIVEN CULTURE into by the government, Gibraltar’s UNIQUE PROPOSITION IN THE EU full integration in the EU and com- Service-driven culture and the ju- AND THE JURISDICTION’S pliance with EU fi nancial services risdiction’s approach to speed to regulation, money laundering and market, has seen the number of APPROACH TO SPEED TO co-operation rules, the territory licensed funds and managers grow. has ended all distinction between Th e Experienced Investor Fund MARKET, HAS SEEN THE “onshore” and “off shore” busi- (EIF) has been popular and de- ness. In October 2015, the Global spite regulatory challenges expe- NUMBER OF LICENSED Forum of the OECD on transpar- rienced worldwide, Gibraltar con- ency and exchange of informa- tinues to have the facility to launch FUNDS AND MANAGERS tion for tax purposes published an EIF and notify (rather than ap- the Phase Two peer review report ply to) the FSC post-launch. Th is GROW on Gibraltar, rating it as ‘Largely reduces any regulatory down-time, Compliant’ overall with regard to which makes this a unique propo- the exchange of tax information sition within the EU. Th e EIF also in practice. AM Best rating agency off ers a free choice of management has given Gibraltar a top score in style; a self-managed fund provides an alternative to third” all three areas of evaluation: very low political risk, very party management. low economic risk and very low fi nancial system risk. Gibraltar has a territorial corporate tax regime, which Th e chief minister of Gibraltar also recently announced only taxes profi ts that are derived from a Gibraltar source. that it would be the fi rst EU jurisdiction to have a central

14 HFMWEEK.COM FINANCIAL SERVICES

register of beneficial ownership of companies, which will private place in territories that have introduced an equiva- be in place before the end of the year. lent regime. Gibraltar can offer one ofa number of solutions to AIFMD COMPLIANCE many of the non-EU managers who are now facing a new As an EU territory, Gibraltar is fully compliant with the era of financial services regulation, which although largely AIFMD. While the directive has created many challenges equivalent to EU standards, does not guarantee access for managers, its arrival has drawn attention to the posi- to the European market. This will be even more impor- tive changes it will have for Gibraltar’s funds industry. In tant, given that the European Securities and Markets Au- the transposition of the AIFMD to national law, EU thority (Esma) has announced that it will delay countries were permitted to decide how to address publishing its advice on the application of the the various derogations inherent in the AIFMD. European marketing passport under AIFMD to Some countries decided to gold-plate the non-EU managers and funds, and its opinion on AIFMD, taking the opportunity to include addi- the functioning of the passport for EU AIFMs tional provisions not covered by it, into local law. GIBRALTAR’S and national private placement regimes until the Implementation differences range from differences fourth quarter of 2016. A Mifid or AIFM licence in regulation covering managers managing assets be- IMPLEMENTATION from Gibraltar would have the same effect as an low the AIFMD’s de minimis threshold (i.e. €100m equivalent licence from Luxembourg, London or [$114.5m] for open-ended funds and €500m APPROACH HAS BEEN Frankfurt but at a fraction of the cost. [$572m] for closed-ended funds without leverage), to depositary rules for out-of-scope funds, delega- TO RETAIN AS MUCH OFFERING SOLUTIONS tion rules, remuneration rules and the application of The Gibraltar establishment options are varied. private placement laws. Gibraltar’s implementation FLEXIBILITY AS THE AIFMD One possibility is that of using an investment approach has been to retain as much flexibility as management platform or incubator who is able to the AIFMD provides for. PROVIDES FOR meet ongoing operational requirements, provide The EIF continues to form the basis for the regu- the support functions and resources that will be latory regime underlying an AIFMD-compliant required for the substance requirements to be met fund. Gibraltar has also retained its EIF regime for and provide the operational and staff support that those funds whose managers are out of scope of is required. This could work as an equivalent to AIFMD, while allowing these managers to opt-in ” full set-up and provide a shorter term solution for to AIFMD should they wish to. For those managers out managers who may not be able to take the full cost of com- of the scope of AIFMD, Gibraltar’s private placement re- pliance with AIFMD as a standalone manager. Gibraltar gime, which was introduced at the end of 2014, means that has the framework and service providers in place to offer Gibraltar funds and their managers would be allowed to these solutions. Q

HFMWEEK.COM 15

GIBRALTAR 2016 FINANCIAL SERVICES

EU ACCESSIBILITY: EXCHANGE TRADED INSTRUMENTS

PHILIP YOUNG, MARKETING DIRECTOR OF GSX LIMITED, EXPLAINS THE VARIETY AND VERSATILITY THE GIBRALTAR STOCK EXCHANGE CAN OFFER

he Gibraltar Stock Exchange (GSX) opened SECURITISATION AND EXCHANGE TRADED INSTRUMENTS in November 2014. GSX is an EU regulated Th e concept of securitisation, though not new, can be market operating under FSC license and rec- applied innovatively to the asset management industry. By ognised by the European Securities and Mar- securitising alternative investments (without any restric- kets Authority (ESMA). tion on asset classes) and issuing securities (debt), whose GSX off ers access and solutions for the repayment value is linked to such alternative investments, it fundT management industry, targeting asset managers who is then possible to list these securities on an EU regulated had not previously considered a listing on an EU exchange market such as GSX. because of cost and complexity. GSX also has a stream- Exchange Traded Instruments (ETIs or asset-backed se- lined listing process across all product lines that is fast to curities) listed on GSX, with approved prospectuses, qualify Philip Young, market and commercially att ractive compared to its peers. for EU passporting rights marketing director, has over 26 years’ investment LISTING YOUR FUND ON GSX: THE FIRST STEP TO RAISING SECURITISATION IN PRACTICE industry experience. VISIBILITY IN THE EU Th e structure works as follows: He began his career in A fund listing on GSX raises EU visibility and comple- investment banking before ments distribution capability. Many institutions have in- Asset Manager moving to investment vestment restrictions on non-listed securities. For inves- management where he tors, a listed status shows a fund has met the standards Hedge Fund spent five years with a start- of an EU exchange. GSX’s website off ers transparency, up hedge fund and, latterly, displaying regular fund data and reporting information. five years with a principal Special Investment Vehicle emerging market private AIFMD AND ACCESSING THE EUROPEAN MARKET equity firm. Philip is a CFA Recent studies show non-EU managers are ignoring EU- Charterholder. based investors in order to avoid complying with AIFMD. Promote Securitisation Company Managers prefer to avoid the extra compliance costs, the risks that occur due to regulatory uncertainty and lack of guidance surrounding the directive. Compliance rates for non-EU managers are low. Only Exchange Trading 15% of US hedge fund managers and a quarter of fi rms Instruments across Asia and rest of world are currently compliant with AIFMD. Th e costs of compliance are higher than expected and 40% of fi rms with less than $100m AuM have made Gibraltar Stock Exchange the strategic decision not to market a fund within the EU. GSX off ers an alternative, fast to market, fl exible and economic solution for fund managers who want to include EU Professional Investor the EU as part of their growth strategy.

HFMWEEK.COM 17 GIBRALTAR 2016 FINANCIAL SERVICES

A special investment vehicle (SIV) is set up as a limited li- EXPANDED CUSTOMER BASE UCITS ELIGIBILITY ability company, which then opens an account with a finan- The Ucits eligible assets regulation clearly states that securi- cial institution and the asset manager makes an allocation of ties listed on an EU regulated market are eligible assets for assets to be held within the SIV. a Ucits fund even if they are collateralised by and/or linked The Securitisation Cell Company (SCC) now issues an to otherwise non-eligible assets. ETIs can make your fund ETI unit that is a pass-through instrument of the invest- eligible for Ucits portfolios. ments held within the SIV. The ETI is therefore linked to and backed by the SIV and PRACTICAL EXAMPLES this passes through all the performance risks of the SIV to ETIs can be used to test demand within the EU and directly the investor of the ETI units. gauge professional interest. Setting up an SCC in an EU jurisdiction that can issue It will be possible for asset managers to work with GSX these innovative financial instruments is critically impor- listing agents to securitise alternative assets, structure an tant. It is vital such jurisdictions have an appropriate secu- ETI and list the instrument on GSX in order to access Eu- ritisation act and SCC legislation. ropean investors. These SCCs act as issuer for these ETIs and the proceeds A small non-EU asset manager may wish to gauge inves- of each of these issurances can be allocated to a segregated tor interest within the EU by first launching an ETI. Such account of the SCC. solutions can be provided at a fraction of the cost of tradi- It is also important no creditor of the company has access tional compliance and in smaller issue sizes (€3-5m, for ex- to these assets even in the event of bankruptcy or in- ample) perhaps not sustainable within a traditional solvency procedures. fund structure. EU AIFMs can also consider securitisation. An BENEFITS OF EXCHANGE TRADED INSTRUMENTS asset manager in London may wish to test a new • The Speed to Market: a securitisation transac- and bring a product offering to his tion can be structured and listed on GSX, with- GSX HAS IDENTIFIED A client base. He may wish to limit the offering to in a few weeks. €5-10m, a level at which may not be economically • Unrestricted Choice of Asset Class: ETIs have COMPELLING BUSINESS sustainable under a traditional fund model. The ETI no restrictions on the asset classes, any alterna- route provides an ideal solution. tive investments are eligible for a securitisation OPPORTUNITY FOR Ucits funds are not able to invest in alternative transaction. funds. Nonetheless, the eligible assets directive of • EU Promotion: ETIs listed on GSX are Ucits el- GIBRALTAR TO EXPLOIT the EU states that securities listed on a stock ex- igible assets issued with an approved prospectus change, linked to and backed by an asset that is non- suitable for a in the EU. ITS UNIQUE POSITIONING eligible, will themselves be eligible for purchase by • Flexibility: ETIs have considerable flexibility a Ucits funds. and are created as a bespoke product. They may AND BECOME A LEADING A fund of funds established under Ucits regula- be designed with the components required by tions may wish to consider an investment in an the client, for instance specified lock-in periods, SECURITISATION CENTRE open-ended real estate fund. While real estate funds weekly, monthly or quarterly subscription/re- themselves are alternative investments and ineligi- demption periods, distributions, variable profit- WITHIN THE EU ble assets under the Ucits directive, by securitising related interest components. Sharia compliant the units of the real estate fund into an ETI and list- Islamic Finance ETI products are also available. ing them on GSX, it becomes eligible. • Licensed asset managers from third countries A Ucits manager can buy the ETI units that are such as Hong Kong, Singapore, the US, and ” linked to and backed by real estate fund units and Switzerland are also able to act as the investment man- consequently has the risk and reward profile of the underly- ager in such securitisation transactions. ing assets. • Regulation: ETIs issued by SCCs under ECB regula- tion 24/2009/ECB are not AIFs and are regulated by GSX’S NEW LISTING CODE LAUNCH the Securitisation Act in the EU domicile of incorpora- In Q4 2015, GSX will expand its offering of listing services tion. to include the listing of ETIs. GSX will deliver a GSX List- ing Code for Debt, Derivatives, and Asset Backed Securities, MARKETING OPPORTUNITIES which complies with the current applicable legislation in Gi- With interest from all over the world to establish securiti- braltar for asset backed, debt and derivative securities. sation structures, ETIs have enormous potential to provide non-EU managers with passport and promotion rights CONCLUSION throughout the EU. GSX has identified a compelling business opportunity for The listing of ETIs on GSX with an approved prospectus Gibraltar to exploit its unique positioning and become a ensures suitability for a public offering to professional inves- leading securitisation centre within the EU. tors throughout Europe. The successful introduction of ETIs and asset-backed se- Professional investors, through their usual broker rela- curities will trigger the development of an alternative, mod- tionship, can consequently purchase ETIs in a simple and ern for Gibraltar, which has a sound politi- price transparent way. cal, economic, and regulatory framework, with an attractive ETIs are always feeders into the underlying assets and market and tax environment. ETIs have a bright future in have no derivative or leverage embedded. Gibraltar. Q

18 HFMWEEK.COM $$$!),.'+.,'.$ -,(#*"

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CONTINUED GROWTH

MOE COHEN, CEO OF BENADY COHEN & CO GROUP, CHARTERED ACCOUNTANTS INCLUDING NEXUS FUND ADMINISTRATION, TALKS TO HFMWEEK ABOUT THE GROWTH OF GIBRALTAR’S FUND INDUSTRY AND WHAT THE JURISDICTION HAS TO OFFER FUNDS

HFMWeek (HFM): What do you see as the most im- ture, which was being administered and audited in portant factors promoting growth in Gibraltar’s fund Dublin. We were able to change the administrator to industry? Nexus while keeping the existing auditor, which was Moe Cohen (MC): Gibraltar is the newest of a number a Big Four Firm. We were able to reduce costs with of European jurisdictions that has grown signifi cantly regard to professional fees by approximately 40%. over the last few years. It is very resilient, which has prov- Th is gives you an indication of how Gibraltar pricing en itself to also be very competitive in a number ways. diff ers from other jurisdictions. In 2005, James Lasry, a prominent fund lawyer in Gibral- tar, and I went to the government and off ered the idea HFM: How is Gibraltar ensuring continued growth in of a new industry – the fund industry. Th e government its fund industry? embraced this idea and within a year we had legislation in MC: Gibraltar is a growing European fund jurisdiction Moe Cohen is a founder place, creating the foundation for what we now know as building on its number of assets and industry players, and CEO of Benady Cohen experienced investor funds. We had looked at a number continuing to command an excellent international repu- & Co Group, Chartered of European and global jurisdictions and picked the best tation. Over the course of time we will see Gibraltar con- Accountants, which includes fund product for the European en- tinuing to expand its position in the Nexus Fund Administration vironment. Th is is the origin of the funds industry, particularly with the Services. The group is experienced investor fund. introduction of AIFMD. also a member of Nexia Th e main benefi ts of an experi- A number of things are currently International. Moe is a enced investor fund are: being done to ensure growth con- member of the executive GIBRALTAR IS A GROWING • Fastest to market: As long as tinues in Gibraltar. First, we are ob- board of GFIA and GSA the fund has been approved by viously maintaining the advantages and advised the Gibraltar EUROPEAN FUND the licensed parties, including that I previously mentioned, which government on the initial fund administrators, directors have enabled the industry to initial- establishment of regulated JURISDICTION BUILDING and lawyers, the fund can be- ly grow exponentially. funds in Gibraltar in 2004. gin to trade within 10 days. ON ITS NUMBER OF Th ere is signifi cant marketing Th is is a big advantage com- being undertaken by the Gibraltar mercially. If there is an oppor- ASSETS AND INDUSTRY government in conjunction with tunity in private equity, securi- the industry. Th is has involved un- ties and instruments markets, PLAYERS, CONTINUING TO dertaking diff erent conferences in time is of the essence. Being diff erent parts of the world, includ- fast to market for a recognised COMMAND AN EXCELLENT ing conferences based in Gibraltar, fund is very important. where we have invited key players • Gibraltar’s regulator is very INTERNATIONAL from the international market to competent and internation- come and hear about the benefi ts of ally recognised for its ability REPUTATION the city. Th is has created quite a bit to provide guidance on any of att raction and truly helped to en- issues throughout the life- sure Gibraltar is always on the map. time of a fund. Gibraltar has also effi ciently im- Th is also means that if you plemented the AIFMD legislation. have any queries, you do not have to wait a long time” Gibraltar therefore off ers, where relevant, AIFMD solu- to get them resolved. Th e accessibility of the regula- tions to a number of diff erent funds from a worldwide tor and the two-way relationship one is able to have perspective. Th e fact Gibraltar has not ‘gold-plated’ the with the latt er, are practically very advantageous. legislation and the rules are very similar to that of the • From a competitive pricing perspective: Gibraltar UK, enables Gibraltar to become very competitive in is in a very strong position. An example of how we – the market in terms of legislation. It provides an avenue Nexus Fund Administration – have benefi ted in this for AIFMD funds to set up in Gibraltar. In addition, the respect, can be seen through a BVI/Cayman struc- services available through the fund industry in Gibraltar,

20 HFMWEEK.COM ACCOUNTING

with regard to AIFMD, ensure there can be contin- FUND CLIENTS CURRENTLY and effective audit files for the auditor in a pro- ued growth in this respect. fessional manner. The audit can therefore go This general fund marketing as well as the ability WANT A COMPLETE ONE- through the all process very smoothly. to latch-on to the latest European legislation, will al- Similarly, when we have Fatca considerations, low Gibraltar to continue to successfully grow this STOP-SHOP SOLUTION. we use the expertise of our tax department. We industry. are able to provide funds with comprehensive THEREFORE THEY WANT services solution. HFM: What are the greatest challenges currently On the other hand, if we are undertaking the faced by your fund clients? How does Nexus THEIR PROFESSIONAL audit of funds as a result of our fund administra- Fund Administration help its clients to over- tion knowledge, we are able to do so in a more come these challenges? SERVICE PROVIDERS TO effective way. The strong levels of experience MC: Fund clients currently want a complete one- across the different areas of our business adds stop-shop solution. Therefore they want their pro- BE AS WELL INFORMED value to the services we provide to clients. fessional service providers to be as well-informed as We have recently obtained a private equity, they can be on different aspects of their fund and its AS THEY CAN BE ON AIFMD depository licence. In a sense, this is an workings. extension of the audit work that we undertake Benady Cohen & Co Group are chartered ac- DIFFERENT ASPECTS OF for our fund clients and it encompasses some countants and provide audit, tax advisory and fund fund administration work that we do. We are also administration services. We are not necessarily THEIR FUND AND ITS looking to obtain an AIFMD manager licence, able to provide certain services to the same client, which will also serve as an extension of our ex- due to conflict of interest rules. However, when it WORKINGS pertise and serve to strengthen the services the comes to the audit of a fund we administer, we have Group provides to our current and future fund the knowledge base to be able to prepare efficient clients. Q ” HFMWEEK.COM 21 GIBRALTAR 2016 SERVICE DIRECTORY

Argon Financial, Simon Brown, Managing Director // T: +44 (0)203 370 6220 // simon.brown@argonfinancial.com // 3rd Floor, LIBC, Ocean Village, Gibraltar Gx11 1Aa // 125 Old Broad Street, London EC2N 1AR

Argon Financial is an established provider of Prime Brokerage services specialising in execution, clearing and custody services for small to medium size funds, family offices, high net worth individuals and other broking firms. Utilising its comprehensive Prime Brokerage network, Argon Financial's execution and clearing capabilities are available via multiple trading platforms, providing direct market access to all asset classes. Argon Financial also provides a robust regulatory structure for institutional brokers to service the major investment banks and hedge funds. PRIME PRIME BROKERAGE

Gibraltar Finance, HM Government of Gibraltar, Philip Canessa // T: +350 200 51165 // philip.canessa@financecentre.gov.gi // www. gibraltarfinance.gi // Suite 761, Europort, Gibraltar, GX11 1AA

Gibraltar is a self-governing and self-financing parliamentary democracy within the European Union. Gibraltar-licensed banks, investment services firms, UCITS, insurance companies, reinsurance companies and insurance mediation firms benefit from access to the single European market and therefore a potential client base of over 500 million people. The AIFMD was transposed into Gibraltar law in July 2013. Gibraltar’s corporation tax rate is 10% and the maximum effective rate of tax for individuals is 25%. Additionally, Gibraltar operates a low tax regime for relocating high-net-worth individuals; capping tax at c. £30,000. Gibraltar is not subject to the VAT regime or the Common Customs Union. GOVERNMENT GOVERNMENT AGENCY

Gibraltar Stock Exchange, Nick Cowan, Managing Director // T: +350 200 67822 // [email protected] // Philip Young, Finance Director // T: +350 200 67822// [email protected] // Suite 834, Europort, Gibraltar

The Gibraltar Stock Exchange (GSX) is an EU regulated exchange that opened on 10th November 2014. GSX offers listing for open-ended collective investment schemes. Services shall extend to other asset classes such as closed-ended funds, ILS’s, bonds, and securitised structured products. GSX in particular targets and provides solutions for small to medium sized asset managers. GSX’s Member Firms aim to offer both a commercially attractive and fast-to-market service. A listing on GSX promotes investor awareness and credibility of the issuer because of their obligations to meet the standards of the listing rules. For certain issuers a listing may also provide EU-wide marketing solutions, therefore widening the potential investor base. STOCK STOCK EXCHANGE

Hassans International Law Firm, James Lasry // T: +350 20079000 // [email protected]

Hassans has been providing legal advice locally and cross borders since 1929 and is the largest law firm in Gibraltar. The firm today has 40 partners and 60 lawyers with 250 employees in total. We are a full service firm with specialisms in corporate, M&A, commercial, financial services, insurance, litigation, funds, gaming, property, private client, tax and shipping law. Hassans is associated with Line Group, an internationally known fiduciary services provider.

ISOLAS T: +350 200 01892 // F: +350 200 66273 // www.gibraltarlawyers.com // Portland House, Glacis, Road, Gibraltar, GX11 1AA

A firm of Gibraltar lawyers dating back to 1892, ISOLAS has been around longer than any other law firm in Gibraltar. Headed by Joey Garcia, ISOLAS’ funds and investment Services team, is very well regarded both locally and internationally, offering a first class and personal service while also developing synergies with clients in these sectors. LEGAL LEGAL

Nexus Fund Administration, Moe Cohen // T: +350 200 74854 // M +350 546 98000 // [email protected]

Nexus Fund Administration Services is part of the Benady Cohen & Co Group. As Chartered Accountants, we provide a full range of services including audit and assurance, tax, advisory, management accounting, due diligence, forensic accounting, fund administration, payroll and company manage- ment, trustee services for individual and corporate clients. Nexus Fund Administration Services are fully licensed fund administrators and provide fund administration services which include a complete range of corporate administration services to funds. Under this arrangement, we are responsible for all fund accounting services and other services, which typically including valuation services, corporate secretarial services, director services and Private Equity AIFMD depositary services. FUND FUND ADMINISTRATION

22 HFMWEEK.COM Established EU Jurisdiction for a wide range of investment funds

Fully AIFMD compliant, with passporting right across the EU

Specialist European master feeder fund solutions

Unique asset manager offering, combining quality of life with fiscal and legislative stability

Professional and internationally recognized fund and investment expertise

GIBRALTAR: THE SPECIALIST FINANCIAL JURISDICTION OF CHOICE IN THE EU GFIA members include Funds, Fund Administrators, Stockbrokers, Investment Managers, Audit Firms, Law Firms,

For more information please contact GFIA Executive Coordinator by e-mail on GATEWAY TO THE EUROPEAN UNION SINGLE MARKET

Gibraltar Finance is the growing success story Experienced Investor Funds (EIF) in Europe for investment funds and investment An EIF is an authorised collective investment scheme exclusively managers. It offers robust fund legislation, a for investment by experienced investors and is designed to favourable fiscal regime, an EU framework, invest in a wide range of traditional or alternative asset classes. efficient regulation, the flexibility of a small jurisdiction and quality infrastructure.

As an EU domicile, Gibraltar Finance provides investors ZLWKbGLUHFWDFFHVVWRWKHVLQJOHPDUNHWLQILQDQFLDOVHUYLFHV thereby enabling passporting throughout the member states of the EU. Gibraltar also presents both political and economic VWDELOLW\WRJHWKHUZLWKDSURIHVVLRQDOZRUNIRUFHWUDLQHGWR international standards and full employment rights for EU/EEA and Swiss citizens. Asset Management

:LWKDTXLFNDQGHIILFLHQWUHJXODWRU\SURFHVV$VVHW One of the attractions of Gibraltar as a fund domicile is that no Management firms can establish themselves as a firm under regulatory approval is required before an EIF can begin to raise WKH)LQDQFLDO6HUYLFHV 0DUNHWVLQ)LQDQFLDO,QVWUXPHQWV $FW capital and commence its investment activities. An EIF may be 2006, or the Financial Services (Alternative Investment Fund launched based on a legal opinion that confirms that the EIF 0DQDJHUV 5HJXODWLRQV7KH$OWHUQDWLYH,QYHVWPHQW)XQG has met all legal and structural requirements for its operations, 0DQDJHUV'LUHFWLYH $,)0' ZDVWUDQVSRVHGLQWR*LEUDOWDU and provided that the fund’s documentation is submitted to the ODZRQ-XO\DQGLQYHVWPHQWPDQDJHPHQWILUPVZKLFK UHJXODWRUIRUUHJLVWUDWLRQZLWKLQEXVLQHVVGD\VRILWVODXQFK IDOOZLWKLQWKH'LUHFWLYHèVUHTXLUHPHQWVFDQPDUNHWDFURVV (8bPHPEHUVWDWHV

For more information visit the Gibraltar Finance website: www.gibraltarfinance.gi