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Gary Linford, managing director of HighWater

CIMA initiates private funds sector consultation process

The Cayman Islands Monetary Authority (CIMA) has initiated a formal consultation process with the financial services industry and other stakeholders to further its dialogue with the industry on corporate governance practices, developments and standards as it relates to the private funds sector.

HighWater supports the initiative and has previously engaged with CIMA to promote stakeholder transparency, including information held by CIMA on its database.
Gary Linford (pictured), managing director of HighWater, believes that CIMA is conducting this exercise in an appropriate manner, and the inclusion of global stakeholders, particularly investors, is the best way to obtain a view of what is relevant and important to the industry. Cayman will be a major beneficiary if the current “disclosure based2 regime can be maintained, thereby providing investors with access to even more information that helps their own due diligence process, rather than a regulator attempting to prescribe what is or is not acceptable to sophisticated investors.

However, Linford sounds a word of caution, noting that the proposed transparency initiative does not go far enough; it should cover more of a fund's service providers rather than just a particular focus on directors, for example, disclosure of the auditor, administrator and legal counsel.
John Lewis, a director and principal at HighWater adds that institutional investors have for a number of years sought greater transparency in respect to fund directorships and other related information pertaining to the funds in which they invest. He says positive changes in the industry are often driven by investor demand. CIMA's consultation should result in significant feedback, and is a desirable process and starting point. He is confident that the Cayman Islands focus on private funds does not require prescriptive regulation, and can allow the successful disclosure based philosophy to endure.

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