By Joe Moynihan, CEO, Jersey Finance – Rafts of global regulatory initiatives are continuing to challenge traditional fund structuring models and make the fund domiciliation picture far more complex, with investor buy-in becoming absolutely vital.
As a result, key issues including Brexit, BEPS, substance and transparency have shot up the agenda when it comes to domiciliation decisions while increased uncertainty, costs, and regulatory and reporting requirements are all becoming major factors for managers and investors. In particular, an investor’s familiarity with a fund domicile and compliance with international standards remains vital. If a jurisdiction is respected by investors, then this gives managers confidence.
These are all themes that are likely to influence decision making for years to come and that look set to shape the future of fund servicing.
It’s clear that, with the fund domiciliation landscape becoming more competitive and complicated, specialist fund domiciles need to be alive to the significance of these key themes so they can be equipped to continue to support the global alternative fund management community.
Critically, investors want a stable jurisdiction with no regulatory, legal or economic surprises – traits that have been underlined by Covid-19. But they also want a jurisdiction that is agile, resilient, innovative and forward-thinking. Balancing these qualities is vital for firms and jurisdictions specialising in alternative fund servicing.
Being able to provide this balance, backed up by deep and broad expertise, requires a high-quality infrastructure, a tried-and-tested legal and regulatory environment, and a clear commitment to specialist expertise and high-quality service.
From a Jersey perspective, being home to a mature and sophisticated fund servicing community is a key part of why the jurisdiction has seen such strong year-on-year growth in alternative fund activity, and why, as Jersey looks forward to the 60th anniversary of its finance industry in 2021, we are so positive about our future.
As managers and investors look to partners they can trust in this newly emerging era of fund domiciliation, jurisdictions will have to be clearer than ever about their unique selling point, assert the stable fund servicing platform they provide, and evidence their quality of service if they are to continue to attract business – issues that this report will undoubtedly highlight.