Hedge Funds Flexible Approach to Authorisation Policy
23rd February 2004The Guernsey Financial Services Commission conducted a consultation exercise between November 2003 and January 2004 on certain aspects of hedge fund operation. It has today published a document - Hedge Funds: Flexible Approach to Authorisation Policy - setting out the main policy conclusions it has reached from that consultation exercise. The full text of the framework policy document can be found here (PDF format 24Kb). The document reiterates the Commission's commitment to its existing flexible approach to authorisation, particularly for institutional and expert investor funds. That flexibility is achieved in various ways, not least by the Commission's existing powers to grant waivers of fund authorisation rules where appropriate. In order to assist fund managers and promoters, the framework document sets out a number of areas of hedge fund operation for which the Commission will accept requests for rule waivers. Those areas are:-
Custody - especially for institutional and expert investor funds, the Commission will not insist that the fund appoint a Guernsey domiciled and licensed custodian, but will be prepared to designate a suitably qualified prime broker to be the fund's custodian.
The Commission will not, for institutional and expert investor funds, wish to insist on complex segregation requirements for prime brokers holding fund assets.
The Commission recognises the complexities of determining net asset value for some hedge funds and funds of hedge funds, and will grant waivers for funds which can demonstrate a need to use NAV estimation processes in advance of final NAV determination.
Where estimation is permitted, the Commission will grant waivers of Client Money Rules requiring segregation of subscription and redemption monies.
Some of these waivers may also be available to hedge funds targeted at less sophisticated investors.
The Commission will issue a more detailed document on authorisation policy for hedge funds within the next two months; in the meantime applicants who wish to make use of the rule waivers indicated in the framework document are welcome to approach the Commission in order to do so.
For further information please contact :-
Peter Moffatt, Director of Investment Business;
Carl Rosumek, Deputy Director; or
Fiona French, Assistant Director
Guernsey Financial Services Commission
La Plaiderie Chambers
La Plaiderie
St. Peter Port
Guernsey GY1 3HQ
Tel: +44 (0) 1481 712706
Fax: +44 (0) 1481 713361
E-mail [email protected]
23 February 2004
Custody - especially for institutional and expert investor funds, the Commission will not insist that the fund appoint a Guernsey domiciled and licensed custodian, but will be prepared to designate a suitably qualified prime broker to be the fund's custodian.
The Commission will not, for institutional and expert investor funds, wish to insist on complex segregation requirements for prime brokers holding fund assets.
The Commission recognises the complexities of determining net asset value for some hedge funds and funds of hedge funds, and will grant waivers for funds which can demonstrate a need to use NAV estimation processes in advance of final NAV determination.
Where estimation is permitted, the Commission will grant waivers of Client Money Rules requiring segregation of subscription and redemption monies.
Some of these waivers may also be available to hedge funds targeted at less sophisticated investors.
The Commission will issue a more detailed document on authorisation policy for hedge funds within the next two months; in the meantime applicants who wish to make use of the rule waivers indicated in the framework document are welcome to approach the Commission in order to do so.
For further information please contact :-
Peter Moffatt, Director of Investment Business;
Carl Rosumek, Deputy Director; or
Fiona French, Assistant Director
Guernsey Financial Services Commission
La Plaiderie Chambers
La Plaiderie
St. Peter Port
Guernsey GY1 3HQ
Tel: +44 (0) 1481 712706
Fax: +44 (0) 1481 713361
E-mail [email protected]
23 February 2004