HFMWeek Special Report Gibraltar 2016 by Gibraltar Finance

HFMWEEK S P E C I A L

R E P O R T

GIBRALTAR 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 Stock Exchange // Hassans // ISOLAS // Nexus Fund Administration

G I B R A LTA R 2 0 1 6

Published by Pageant Media Ltd LONDON Third Floor, Thavies Inn House, 3-4 Holborn Circus, London, EC1N 2HA T +44 (0) 20 7832 6500 NEW YORK 200 Park Avenue South Suite 1603, NY 10003 T +1 646 891 2110 REPORT EDITOR Mike Sheen T: +44 (0) 20 7832 6628 m.sheen@pageantmedia.com HFMWEEK HEAD OF CONTENT Paul McMillan T: +1 646 891 2118 p.mcmillan@pageantmedia.com HEAD OF PRODUCTION Claudia Honerjager SUB-EDITORS Luke Tuchscherer, Mary Cooch, Alice Burton, Charlotte Romeyer GROUP COMMERCIAL MANAGER Lucy Churchill T: +44 (0) 20 7832 6615 l.churchill@hfmweek.com HEAD OF BUSINESS DEVELOPMENT AMERICAS Tara Nolan T: +1 (646) 891 2114 t.nolan@hfmweek.com PUBLISHING ACCOUNT MANAGERS Amy Reed T: +44 (0) 20 7832 6618 a.reed@hfmweek.com Alex Roper T: +44 (0) 20 7832 6594 a.roper@hfmweek.com David Butroid +44 (0)207 832 6613 d.butroid@hfmweek.com CONTENT SALES Tel: +44 (0) 20 7832 6511 sales@hfmweek.com

INTRODUCTION

ibraltar’s position as a European finance centre continues to evolve and develop as a true alternative within Europe. Jurisdictions across the world are now adapting or introducing legislation that seeks EU equivalence, attempting to secure EU access from a fund distribution or investment services perspective. Gibraltar is a fund and investment services domicile providing a European passporting solution and access within an EU compliant framework. Changes to regulatory frameworks across multiple jurisdictions seeking equivalence are important, but ‘third country’ access to Europe in respect of AIFMD or MiFID II is far from clear. What the changes show is that there will continue to be less and less regulatory arbitrage between different jurisdictions and a narrowing gap between non-EU and EU jurisdictions in this respect. Gibraltar offers a secure, safe and typically low-cost jurisdiction that keeps 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 Gibraltar, which provides a CRT rating of one and a better rating than many other international finance centres. This rating denotes the lowest possible level of economic, political and financial system risk. Also consider Gibraltar’s OECD report on transparency and exchange of 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 terms of compliance and international standards has been a strategic direction. This means Gibraltar is able to offer a European, fully-compliant framework, within a VAT exempt territory and extremely competitive rates of individual 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. The Gibraltar Finance Centre also strongly supports and assists the Gibraltar Funds and Investments Association (GFIA) and the Gibraltar industry in its efforts to develop the city in this space. Recent trips to Singapore, Hong Kong and Geneva are beginning to bear fruit as managers start to plan for the longterm. Meanwhile Swiss managers begin to see the changes to their own asset management industry, placing the classic independent asset manager model under regulatory pressures for the first time. These managers are not necessarily able to secure access to the EU under third country provisions provided by MiFID II, which will introduce additional requirements before they are able to offer their services in Europe. Gibraltar offers a tried and tested solution, which is likely to be faster and cheaper to establish and operate. Similarly, in an AIFMD context Gibraltar can act not only as a domicile for the AIFM and the AIF, but is also one of the few smaller jurisdictions that has a selection of AIFM depositaries based within the jurisdiction to service such AIFs. Something that will become a requirement from 2017. Gibraltar continues to offer a very strong value proposition and, as an association, GFIA continues to evolve and support the growth of the industry.

CEO Charlie Kerr

Joey Garcia HFMWeek is published weekly by Pageant Media Ltd ISSN 1748-5894 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

Chairman, Gibraltar Funds & Investments Association, for and on behalf of the GFIA Executive: James Lasry, Moe Cohen, Johann Olivera, Benjy Cuby, Carlos Martins, Jay Gomez, Jordan Ramagge.

H F M W E E K . CO M 3

CONTENTS

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PRIME BROKERAGE

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

FINANCIAL SERVICES

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

FINANCIAL SERVICES

MAINTAINING A STRONG JURISDICTION Philip Canessa, senior executive at Gibraltar Finance, talks to HFMWeek about how Gibraltar supports its hedge fund industry

4 H F M W E E K . CO M

A SOLUTIONS-DRIVEN JURISDICTION Jonathan Garcia, senior associate at ISOLAS, explains how Gibraltar’s fund industry is serviced with ﬂexibility and competence

LEGAL

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

ACCOUNTING

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

When it comes to funds...

...Hassans leads the way International Lawyers

In recent years, the fund industry in Gibraltar has seen rapid and impressive growth. Gibraltar is now a serious option for individuals and companies considering where to base investment funds. Hassans has been at the forefront of this development and in 2004 became the first firm in Gibraltar to set up a funds practice, quickly establishing itself as the “go to” firm. Hassans is ranked as the sole leader for Investment Funds by Legal 500 and EMEA

describe the department as a “Rolls-Royce investment funds practice...led by James Lasry, a leading investment funds lawyer with ﬁrst-class knowledge of the local and wider market”. (EMEA 2014 Edition) Hassans is fundamental to any fund being set-up in Gibraltar whether Private, EIFs, Non- UCITS Retail Funds, UCITS Funds or Protected Cell Companies. 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 • business@hassans.gi

G I B R A LTA R 2 0 1 6

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

Simon Brown is CEO of Argon Financial. His career in the financial markets has spanned almost three decades. He worked for 12 years as a derivative trading specialist in London followed by 17 years building trading and agency businesses servicing institutional, corporate, hedge fund and high-net-worth clients. Simon founded one of the first institutional electronic derivative broking businesses and has been CEO of Argon Financial for eight years.

HFMWeek (HFM): There is a growing trend of prime broker repricing occurring at the moment and costs are increasing as a result. What do you see at the main cause of this trend? Simon Brown (SB): Undoubtedly, the primary cause of this trend of prime broker repricing is the Basel III regulatory framework on bank capital adequacy, stress testing and market liquidity risk. This framework contains a set of buffers, capital and liquidity ratios, which have effectively made it more expensive for the banks to conduct prime brokerage business; typically providing financing, custody, securities lending, capital introduction, trading systems and access to markets. The key reason for the implementation of these requirements and ultimately the scenario that many smaller funds and other corporates are now facing, is the type of bank trading that occurred up to 2008/09, which in turn was a catalyst to the systemic collapse and banking crisis. It is important to remember that the banking crisis was not just a capital issue, it was a liquidity issue as well. As a result liquidity has become the focus for regulators, particularly those in Europe, in an effort to ensure that a systemic crisis will not occur again. Balance sheet efficiency is now a main focus for the banking industry with this focus precipitating in the large prime brokers becoming more selective in who they seek and keep as their clients. In response to the framework of Basel III, the banks have been reviewing all client accounts to evaluate whether they can justify the return on equity (RoE) from those accounts. Repricing has been just one of the choices for increasing RoE. Some banks have also introduced minimum monthly fees for clients, or even both monthly fees and repricing.

And in many cases an increasing trend has emerged of prime brokers kindly asking funds and other corporates to look for alternative prime broker relationships. This problem is tough enough if you are already a client of one of the larger prime brokers. New applicants are often asked to jump through many more hoops before their application is considered, with minimum balance sheet requirements of more than $20m not uncommon.

IN RESPONSE TO THE FRAMEWORK OF BASEL III, THE BANKS HAVE BEEN REVIEWING ALL CLIENT ACCOUNTS TO EVALUATE WHETHER THEY CAN JUSTIFY THE RETURN ON EQUITY (RoE) FROM THOSE ACCOUNTS. REPRICING HAS BEEN JUST ONE OF THE CHOICES FOR INCREASING RoE

HFM: Do you think fund managers will begin to look to alternative providers in an effort to lower costs? SB: Large bank prime brokers may find themselves in a situation where they can no longer justify providing prime broker services to smaller funds. As a result, the market has opened up for smaller prime brokers (mini prime or prime of prime), who may not be burdened by legacy technologies/systems and high fixed costs, with many boutique operators choosing a variable cost operational model. These mini prime operators can therefore onboard the smaller clients as they do not have the high fixed costs or the extent of capital and leverage constraints that the larger ‘bank’ prime brokers may have. There is no doubt that if existing large prime brokers have been making noises about account reviews to their clients, these funds and other corporates have been looking for alternative options for execution, lending, settlement and custody. There are also instances where medium-sized funds are coming under pressure from their prime brokers and this pressure is unlikely to subside in the near future, given the increased level and cost associated with the regulatory environment and reporting requirements. Gone are the days where banks would do their upmost

”

6 H F M W E E K . CO M

PRIME BROKER AGE

the larger banks have, it is able to onboard and service these funds and other corporates. That is not to say mini primes do not conduct similar KYC onboarding processes as the banks, but they may not have the extent of bureaucracy and administrative processes that the banks have, and are therefore able to process applications more efficiently. As long as mini prime brokers are able to fill the gap providing prime broker services to the small- to medium-sized funds and brokers, which may otherwise fail to reach the bar set by the larger prime brokers, the fund industry can continue to grow. However, without the participation of mini prime brokers, new entrants to the market may struggle to find adequate execution and settlement services by which to operate.

to onboard any size fund to increase their client account quota in the hope that those applicants would grow to become large hedge funds. HFM: How are smaller prime brokers able to provide their services to funds at a lower cost than larger firms? SB: All large ‘bank’ prime brokers are subject to all of the new capital and liquidity ratios implemented under the Basel III framework. Liquidity constraints for these large banks result is less capital being available for their clients. However, there are some smaller tier one operators (investment firms) who have the permissions and capability to offer small-to medium-sized funds and brokers execution, clearing, lending and custody services, without the burden of the cost-base and liquidity constraints that the larger prime brokers are subject to. These mini prime brokers are therefore filling an important gap in the prime broker market, providing key execution and custody services to the small funds and corporates who would otherwise be unable to operate in these markets.

AS LONG AS MINI PRIME BROKERS ARE ABLE TO FILL THE GAP PROVIDING PRIME BROKER SERVICES TO THE SMALL- TO MEDIUM-SIZED FUNDS AND BROKERS, WHICH MAY OTHERWISE FAIL TO REACH THE BAR SET BY THE LARGER PRIME BROKERS, THE FUND INDUSTRY CAN CONTINUE TO GROW

HFM: Do the large prime brokers welcome volume aggregators such as Argon Financial? SB: Absolutely. Even though the larger prime brokers may be unable to onboard and/or facilitate services for many funds and other corporates, they are still able to benefit from the volume when aggregated by a mini prime broker. In this instance the mini prime aggregator incurs the cost of onboarding and administration of multiple small clients, while still facing the prime broker as one corporate omnibus account. Among other roles, Argon Financial is one such mini prime broker. It has an extensive network of relationships with many of the large bank prime brokers. As a smaller firm, without some of the constraints

”

HFM: Why is Gibraltar an attractive jurisdiction for the hedge fund industry? SB: Argon Financial was founded and incorporated in Gibraltar, simply because Gibraltar is a great place to do business. Gibraltar offers a robust regulatory structure governed by the Financial Services Commission, with passporting capabilities into the rest of Europe. The Financial Services Commission is structured to regulate investment firms (like Argon Financial), banks and funds, among others; with the Experience Investor Fund (EIF) structure seeing strong growth since its inception. The Gibraltar funds industry also benefits from the recently set up Gibraltar Stock Exchange where funds can be publicly listed, regardless of size. If a fund wants an EU listing the GSX provides the platform for them to do so. Gibraltar’s finance centre offers a well-regulated, transparent and internationally cooperative jurisdiction. Although Gibraltar is relatively small, it is able to punch above its weight as a centre for financial services and does an excellent job of providing services to firms operating within its shores. Q H F M W E E K . CO M 7

G I B R A LTA R 2 0 1 6

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

James Lasry is head of funds at Hassans Law Firm. He has been instrumental in setting up many of Gibraltar’s funds, including the first Experienced Investor Fund (EIF) and Protected Cell Company (PCC) Fund and advises the government of Gibraltar on funds legislation.

HFMWeek (HFM): What are the key challenges faced by hedge funds marketing themselves in Europe? James Lasry (JL): AIFMD has fundamentally changed the way in which hedge funds are marketed in Europe. In the past, in order to be able to promote a fund to European investors you had to rely on questionable doctrines such as reverse solicitation. These days, regimes have changed. This means that you must rely on national private-placement issues, which are now standardised among European jurisdictions. Alternatively you must have a way of marketing funds throughout Europe. This is something that AIFMD can offer by way of the European Marketing Passport. At AIFMD’s inception, the industry started looking at doctrines such as reverse solicitation. The industry has moved on in this respect. The discussion that occurs now is primarily around national private-placement regimes. Some thought is being given to using the marketing passport of AIFMD. But in my view, not enough thought is being given in this regard. This is because the perception has been that compliance with AIFMD doesn’t bring a lot of value to investors, but brings a lot of cost and regulatory burden. However, there are two big surprises with AIFMD: First, compliance is not nearly as difficult as was feared. Second, the national private-placement regimes have actually been tightened, in many instances, well in advance of the 2018 deadline imposed by the directive. So with these regimes, by and large, being difficult to comply with (with the notable exception of the UK), it would stand to reason that managers that wish to market into the EU should consider a passportable vehicle.

dictions that are as close to Cayman in terms of its regulatory structure as possible, while still being in the context of the EU. When you consider common law, the prevalence of the English language, ultimate appeal to the Privy Council and a regulatory philosophy similar to that of the Cayman Islands that allows you to launch a fund before you receive regulatory approval, Gibraltar checks all of these boxes. Gibraltar is the closest jurisdiction to the Cayman Islands, in terms of regulatory experience, that one is likely to get within the context of the EU. It also of course provides the ability to passport throughout the EU. The industry is probably insufficiently aware of the speed-to-market capabilities of launching inherent in the process of launching a fund in Gibraltar. For example, in Gibraltar you can establish your funds in as long as it takes to draft the documentation and open the various bank and brokerage accounts. You are then able to launch the fund after just 20 days of notification from the regulator. This fund will be passportable throughout the EU. In contrast, in other jurisdictions you would have to potentially wait significant periods of time for that fund to become authorised in its own right, which is in addition to authorisation of AIFMD itself, before you can begin trading with that fund. My estimation is that this process would take six weeks at the very least, and potentially several months to complete in other European jurisdictions. Furthermore, the costs in Gibraltar are significantly lower than in other European jurisdictions. It is possible to set up a fund with much lower AuM than would be viable in these jurisdictions.

GIBRALTAR IS THE CLOSEST JURISDICTION TO THE CAYMAN ISLANDS, IN TERMS OF REGULATORY EXPERIENCE, THAT ONE IS LIKELY TO GET WITHIN THE CONTEXT OF THE EU

”

HFM: Which of the European jurisdictions should one use in order to have a passportable fund? JL: Most of the industry has been used to jurisdictions like the Cayman Islands. It would stand to reason, therefore, that rather than going to jurisdictions that have very different regulatory philosophies, funds should operate in juris8 H F M W E E K . CO M

HFM: What is Hassans role in helping its clients overcome the challenges associated with marketing a fund in Europe? JL: First of all, we help by identifying the client’s investment and marketing needs. We advise clients on the most appropriate regulatory regime for them to meet those needs.

LEGAL

HFM: What role has Hassans played in advising the Gibraltar government on new laws? JL: Just over 10 years ago, my colleagues proposed the Experienced Investor Fund (EIF) legislation to the government. This proposition was reviewed by the Finance Centre, the regulator and the government. In what is a tribute to the open-mindedness of this small jurisdiction, this legislation became law within 12 months of the original proposition. In legislative terms, this is just about the speed of light. This is possible because of the close relationship that exists between the government, the regulator and the industry in Gibraltar. In fact, the industry since then has become much more galvanised. This can be seen through the work of the Gibraltar Funds & Investments Association. This three-part relationship has become that much stronger as a result, which allows for innovation and prudent regulation.

AIFMD because it is such a fundamental change in the way funds are managed. Hedge funds and private equity funds are now obligated to create or employ an AIFMD manager, which in many ways is analogous to a Ucits. This is not necessarily fulfilling an investment manager role that it used to before the directive. Because of this, much of the industry seem to be clinging to the old ways of structuring funds and using the same jurisdictions as they used to before the directive. I think that with time the industry will become more comfortable with both the requirements and advantages presented by AIFMD with regard to passporting rights. This is particularly relevant in the respect of the narrowing and closure of privateplacement regimes, as well as the possible opening up of passporting to third jurisdictions. I think the AIFMD will become the norm for marketing into Europe. It has taken time, but the industry will adapt. When it does, jurisdictions like Gibraltar that offer very competitive solutions as a result of not ‘gold-plating’ the directive, will become a much more prevalent and popular fund jurisdiction. Q

WITH TIME THE INDUSTRY WILL BECOME MORE COMFORTABLE WITH BOTH THE REQUIREMENTS AND ADVANTAGES PRESENTED BY AIFMD WITH REGARD TO PASSPORTING RIGHTS

HFM: How do you expect the hedge fund industry to develop in the years ahead with regard to AIFMD? JL: The industry has found it difficult to get to grips with

”

H F M W E E K . CO M 9

G I B R A LTA R 2 0 1 6

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 Gibraltarâ&#x20AC;&#x2122;s hedge fund industry developed over the past decade? Philip Canessa (PC): We introduced the Experienced Investor Funds (EIFs) regime in 2005 and since its introduction it has been the main driver of growth of our fund industry. The EIF has proved to be an excellent vehicle for the establishment of hedge funds. This has become more significant since the introduction of the AIFMD, as EIFs may be operated as a compliant Alternative Investment Fund under AIFMD.

Our EIF is a very flexible and attractive vehicle with a number of key advantages such as a pre-launch approval process, competitive start-up costs, it can be self-managed and it is tax neutral. Our regulator, the Gibraltar Financial Services Commission, currently have around 200 registered EIFs, including sub-funds with investment strategies, which include securities, mixed strategies, fund-of-funds, real estate and private equity among others. H F M W E E K . C O M 11

FINANCIAL SERVICES

G I B R A LTA R 2 0 1 6

Philip Canessa joined Gibraltar Finance as senior finance centre executive, focusing on the development of the funds and asset management sectors, in which he has more than 30 years of experience. He was managing director of an investment firm for 11 years and also served as a board director in different jurisdictions.

HFM: What does Gibraltar ensure are efficient and appropriate regulatory framework? PC: We have a forward-looking and effective regulator that treats the firms it authorises and supervises in the same manner as the private sector firms treat their clients. This means being fast and responsive. There are many jurisdictions in Europe, let alone outside Europe, where the regulator is able to deal with the applications at whatever pace it wishes and is not accountable to anyone. We do not believe that this should be the case. We have invested heavily and worked very hard with our regulator to ensure that it is delivering speed to market. That is of fundamental importance in financial services in today’s world. What we expect from our regulator is a fast, responsive and efficient service to license firms, not just in the application process but in the general regulatory approach and environment. As a small jurisdiction we all work together; the regulator, the government and the industry professional to achieve this aim.

cialist skills (HEPSS) scheme, for individuals who have skills or experience that are not available in Gibraltar, and deemed necessary to promote and sustain economic activity of particular economic value to Gibraltar. These individuals must also have approved residential accommodation in Gibraltar. The HEPSS could be the CEO or chief investment officer of a hedge fund management firm and, under this scheme, the individual’s personal tax would be capped at approximately £30,000, providing the individual’s earnings are in excess of £120,000 p.a. HFM: How important is Gibraltar’s position as an EU domicile in appealing to hedge funds? PC: This is extremely important and more so following the transposition and introduction of the AIFMD. Gibraltar is within the European Union and can therefore passport its financial services throughout the EU. As an example, a non-EU manager wanting to market their services or raise capital within the EU, could set up in Gibraltar and passport its services from the Gibraltar firm to the rest of the EU. This advantage obviously does not apply solely to non-EU managers. A start-up manager from the UK could also use Gibraltar to set up and take advantage of the costs and efficiencies associated with a small jurisdiction, but having all the benefits of a familiar legal and regulatory system within a high quality infrastructure and a good quality of life.

THE FUNDS INDUSTRY IS SUPPORTED BY HIGH QUALITY SERVICE PROVIDERS. WE HAVE BANKS, WHICH ARE LICENSED DEPOSITARIES AS REQUIRED UNDER THE AIFMD AND 10 LICENSED FUND ADMINISTRATORS

HFM: What are the tax advantages of operating a fund in Gibraltar? PC: If we talk about the EIF, which is the fund vehicle for hedge funds, these funds are tax neutral. This means that the EIF itself does not pay tax. The tax advantages, however, can also be enjoyed by the regulated AIFM or investment manager and by certain individuals working for the regulated firm. The corporate tax rate chargeable on taxable profits of the firm is 10% and the effective rate of income tax for individuals is 25%. There is a scheme, the high executive possessing spe-

”

HFM: How else is Gibraltar able to support funds industry? PC: The funds industry is supported by high quality service providers. We have banks, which are licensed depositaries 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 confident our funds industry will develop in a very positive way in the decade ahead. We have been very active in raising the profile of our jurisdiction and in informing professionals in different geographical areas about our funds regime. As part of this strategy, for example, we visited Singapore and Hong Kong in July of this year, where we hosted events, together with a delegation of financial services professionals from Gibraltar, and explained the benefits of using Gibraltar and what it has to offer. We are also focusing our business development programme in London and Switzerland, our traditional target locations, and are certain that this will develop successfully for us. Q

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O R V I S I T H F M W E E K . CO M FO R D E TA I L S

G I B R A LTA R 2 0 1 6

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

Jonathan Garcia is a senior associate within the Funds and Investment Services Team at ISOLAS. He advises on a wide array of fund structures and solutions and is also routinely involved in assisting investment firms to become authorised in Gibraltar. He is ranked as an ‘up and coming’ practitioner in Chambers Global 2015, having attracted praise for his work on structuring of investment funds.

ibraltar’s burgeoning financial services sector dates back to 1967, when provisions for a special tax regime for international business were made. The industry has made great strides since those early days, transitioning into an “onshore” European financial services centre, with numerous benefits for funds and managers. Gibraltar’s vantage point over the Western Mediterranean, known as the meeting place of continents, and its subtropical climate, are not the only factors attracting fund and fund managers to the British territory. Gibraltar’s regulator, the Financial Services Commission (FSC), has a strong history of delivering effective regulation that is modern and efficient, operating to defined standards. The FSC, with the full support of the government of Gibraltar, is implementing a strategic plan with the objective of operating in a professional and proportionate manner. The FSC is concentrating on the issues that matter most, working to respond in shorter timescales and minimising the burden and cost of compliance, while delivering these changes with “business as usual” delivery. The FSC provides clear process and set timeframes for approval of applications and has recently established service standards shorter than that stated in legislation. This will further streamline the application and regulatory processes for applicants.

Irrespective, managers licensed and regulated under Gibraltar law are taxed in Gibraltar on their profits. The standard rate of company tax is 10%. Funds are generally structured to be tax-neutral. This can be achieved in two possible ways: • The first is by obtaining a certificate from the commissioner of income tax for an exemption on tax on investment income to be granted. Under this certificate the fund is not subject to corporate tax on invested income. • The other option is to elect to be taxed under Gibraltar’s corporate tax regime, which is unlikely to result in tax liabilities unless the fund is investing in physical assets located in Gibraltar. EMPLOYEE BENEFITS Incentives also exist for employees of fund managers. Those who meet certain criteria can avail themselves of the High Executive Possessing Specialist Skills (HEPSS) status and will only be taxed on the first £120,000 of earned income, which at the current rate of income tax caps their tax at around £30,000. Gibraltar does not tax investment income, there is no capital gains tax, no wealth tax, no inheritance tax and the territory is excluded from the requirement to levy VAT, despite being in the EU. Territories such as Malta, Dublin and Luxembourg for example, all levy VAT. Through tax information exchange agreements being entered into by the government, Gibraltar’s full integration in the EU and compliance with EU financial services regulation, money laundering and co-operation rules, the territory has ended all distinction between “onshore” and “offshore” business. In October 2015, the Global Forum of the OECD on transparency and exchange of information for tax purposes published the Phase Two peer review report on Gibraltar, rating it as ‘Largely Compliant’ overall with regard to the exchange of tax information in practice. AM Best rating agency has given Gibraltar a top score in all three areas of evaluation: very low political risk, very low economic risk and very low financial system risk. The chief minister of Gibraltar also recently announced that it would be the first EU jurisdiction to have a central

SERVICE-DRIVEN CULTURE AND THE JURISDICTION’S APPROACH TO SPEED TO MARKET, HAS SEEN THE NUMBER OF LICENSED FUNDS AND MANAGERS GROW

UNIQUE PROPOSITION IN THE EU Service-driven culture and the jurisdiction’s approach to speed to market, has seen the number of licensed funds and managers grow. The Experienced Investor Fund (EIF) has been popular and despite regulatory challenges experienced worldwide, Gibraltar continues to have the facility to launch an EIF and notify (rather than apply to) the FSC post-launch. This reduces any regulatory down-time, which makes this a unique proposition within the EU. The EIF also offers a free choice of management style; a self-managed fund provides an alternative to third party management. Gibraltar has a territorial corporate tax regime, which only taxes profits that are derived from a Gibraltar source.

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FINANCIAL SERVICES

private place in territories that have introduced an equivalent regime. Gibraltar can offer one of a number of solutions to many of the non-EU managers who are now facing a new era of financial services regulation, which although largely equivalent to EU standards, does not guarantee access to the European market. This will be even more important, given that the European Securities and Markets Authority (Esma) has announced that it will delay publishing its advice on the application of the European marketing passport under AIFMD to non-EU managers and funds, and its opinion on the functioning of the passport for EU AIFMs and national private placement regimes until the fourth quarter of 2016. A Mifid or AIFM licence from Gibraltar would have the same effect as an equivalent licence from Luxembourg, London or Frankfurt but at a fraction of the cost.

register of beneficial ownership of companies, which will be in place before the end of the year. AIFMD COMPLIANCE As an EU territory, Gibraltar is fully compliant with the AIFMD. While the directive has created many challenges for managers, its arrival has drawn attention to the positive changes it will have for Gibraltar’s funds industry. In the transposition of the AIFMD to national law, EU countries were permitted to decide how to address the various derogations inherent in the AIFMD. Some countries decided to gold-plate the AIFMD, taking the opportunity to include additional provisions not covered by it, into local law. Implementation differences range from differences in regulation covering managers managing assets below the AIFMD’s de minimis threshold (i.e. €100m [$114.5m] for open-ended funds and €500m [$572m] for closed-ended funds without leverage), to depositary rules for out-of-scope funds, delegation rules, remuneration rules and the application of private placement laws. Gibraltar’s implementation approach has been to retain as much flexibility as the AIFMD provides for. The EIF continues to form the basis for the regulatory regime underlying an AIFMD-compliant fund. Gibraltar has also retained its EIF regime for those funds whose managers are out of scope of AIFMD, while allowing these managers to opt-in to AIFMD should they wish to. For those managers out of the scope of AIFMD, Gibraltar’s private placement regime, which was introduced at the end of 2014, means that Gibraltar funds and their managers would be allowed to

GIBRALTAR’S IMPLEMENTATION APPROACH HAS BEEN TO RETAIN AS MUCH FLEXIBILITY AS THE AIFMD PROVIDES FOR

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OFFERING SOLUTIONS The Gibraltar establishment options are varied. One possibility is that of using an investment management platform or incubator who is able to meet ongoing operational requirements, provide the support functions and resources that will be required for the substance requirements to be met and provide the operational and staff support that is required. This could work as an equivalent to full set-up and provide a shorter term solution for managers who may not be able to take the full cost of compliance with AIFMD as a standalone manager. Gibraltar has the framework and service providers in place to offer these solutions. Q H F M W E E K . C O M 15

FINANCIAL SERVICES

G I B R A LTA R 2 0 1 6

EU ACCESSIBILITY: EXCHANGE TRADED INSTRUMENTS PHILIP YOUNG, MARKETING DIRECTOR OF GSX LIMITED, EXPLAINS THE VARIETY AND VERSATILITY THE GIBRALTAR STOCK EXCHANGE CAN OFFER

Philip Young, marketing director, has over 26 yearsâ&#x20AC;&#x2122; investment industry experience. He began his career in investment banking before moving to investment management where he spent five years with a startup hedge fund and, latterly, five years with a principal emerging market private equity firm. Philip is a CFA Charterholder.

he Gibraltar Stock Exchange (GSX) opened in November 2014. GSX is an EU regulated market operating under FSC license and recognised by the European Securities and Markets Authority (ESMA). GSX offers access and solutions for the fund management industry, targeting asset managers who had not previously considered a listing on an EU exchange because of cost and complexity. GSX also has a streamlined listing process across all product lines that is fast to market and commercially attractive compared to its peers.

SECURITISATION AND EXCHANGE TRADED INSTRUMENTS The concept of securitisation, though not new, can be applied innovatively to the asset management industry. By securitising alternative investments (without any restriction on asset classes) and issuing securities (debt), whose repayment value is linked to such alternative investments, it is then possible to list these securities on an EU regulated market such as GSX. Exchange Traded Instruments (ETIs or asset-backed securities) listed on GSX, with approved prospectuses, qualify for EU passporting rights

LISTING YOUR FUND ON GSX: THE FIRST STEP TO RAISING VISIBILITY IN THE EU A fund listing on GSX raises EU visibility and complements distribution capability. Many institutions have investment restrictions on non-listed securities. For investors, a listed status shows a fund has met the standards of an EU exchange. GSXâ&#x20AC;&#x2122;s website offers transparency, displaying regular fund data and reporting information.

SECURITISATION IN PRACTICE The structure works as follows:

AIFMD AND ACCESSING THE EUROPEAN MARKET Recent studies show non-EU managers are ignoring EUbased investors in order to avoid complying with AIFMD. 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 15% of US hedge fund managers and a quarter of firms across Asia and rest of world are currently compliant with AIFMD. The costs of compliance are higher than expected and 40% of firms with less than $100m AuM have made the strategic decision not to market a fund within the EU. GSX offers an alternative, fast to market, flexible and economic solution for fund managers who want to include the EU as part of their growth strategy.

Asset Manager Hedge Fund Special Investment Vehicle

Promote

Securitisation Company

Exchange Trading Instruments

Gibraltar Stock Exchange

EU Professional Investor

H F M W E E K . C O M 17

FINANCIAL SERVICES

G I B R A LTA R 2 0 1 6

A special investment vehicle (SIV) is set up as a limited liability company, which then opens an account with a financial institution and the asset manager makes an allocation of assets to be held within the SIV. The Securitisation Cell Company (SCC) now issues an ETI unit that is a pass-through instrument of the investments held within the SIV. The ETI is therefore linked to and backed by the SIV and this passes through all the performance risks of the SIV to the investor of the ETI units. Setting up an SCC in an EU jurisdiction that can issue these innovative financial instruments is critically important. It is vital such jurisdictions have an appropriate securitisation act and SCC legislation. These SCCs act as issuer for these ETIs and the proceeds of each of these issurances can be allocated to a segregated account of the SCC. It is also important no creditor of the company has access to these assets even in the event of bankruptcy or insolvency procedures. BENEFITS OF EXCHANGE TRADED INSTRUMENTS • The Speed to Market: a securitisation transaction can be structured and listed on GSX, within a few weeks. • Unrestricted Choice of Asset Class: ETIs have no restrictions on the asset classes, any alternative investments are eligible for a securitisation transaction. • EU Promotion: ETIs listed on GSX are Ucits eligible assets issued with an approved prospectus suitable for a public offering in the EU. • Flexibility: ETIs have considerable flexibility and are created as a bespoke product. They may be designed with the components required by the client, for instance specified lock-in periods, weekly, monthly or quarterly subscription/redemption periods, distributions, variable profitrelated interest components. Sharia compliant Islamic Finance ETI products are also available. • Licensed asset managers from third countries such as Hong Kong, Singapore, the US, and Switzerland are also able to act as the investment manager in such securitisation transactions. • Regulation: ETIs issued by SCCs under ECB regulation 24/2009/ECB are not AIFs and are regulated by the Securitisation Act in the EU domicile of incorporation.

EXPANDED CUSTOMER BASE UCITS ELIGIBILITY The Ucits eligible assets regulation clearly states that securities listed on an EU regulated market are eligible assets for a Ucits fund even if they are collateralised by and/or linked to otherwise non-eligible assets. ETIs can make your fund eligible for Ucits portfolios. PRACTICAL EXAMPLES ETIs can be used to test demand within the EU and directly gauge professional interest. It will be possible for asset managers to work with GSX listing agents to securitise alternative assets, structure an ETI and list the instrument on GSX in order to access European investors. A small non-EU asset manager may wish to gauge investor interest within the EU by first launching an ETI. Such solutions can be provided at a fraction of the cost of traditional compliance and in smaller issue sizes (€3-5m, for example) perhaps not sustainable within a traditional fund structure. EU AIFMs can also consider securitisation. An asset manager in London may wish to test a new trading strategy and bring a product offering to his client base. He may wish to limit the offering to €5-10m, a level at which may not be economically sustainable under a traditional fund model. The ETI route provides an ideal solution. Ucits funds are not able to invest in alternative funds. Nonetheless, the eligible assets directive of the EU states that securities listed on a stock exchange, linked to and backed by an asset that is noneligible, will themselves be eligible for purchase by a Ucits funds. A fund of funds established under Ucits regulations may wish to consider an investment in an open-ended real estate fund. While real estate funds themselves are alternative investments and ineligible assets under the Ucits directive, by securitising the units of the real estate fund into an ETI and listing them on GSX, it becomes eligible. A Ucits manager can buy the ETI units that are linked to and backed by real estate fund units and consequently has the risk and reward profile of the underlying assets.

GSX HAS IDENTIFIED A COMPELLING BUSINESS OPPORTUNITY FOR GIBRALTAR TO EXPLOIT ITS UNIQUE POSITIONING AND BECOME A LEADING SECURITISATION CENTRE WITHIN THE EU

MARKETING OPPORTUNITIES With interest from all over the world to establish securitisation structures, ETIs have enormous potential to provide non-EU managers with passport and promotion rights throughout the EU. The listing of ETIs on GSX with an approved prospectus ensures suitability for a public offering to professional investors throughout Europe. Professional investors, through their usual broker relationship, can consequently purchase ETIs in a simple and price transparent way. ETIs are always feeders into the underlying assets and have no derivative or leverage embedded. 18 H F M W E E K . CO M

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GSX’S NEW LISTING CODE LAUNCH In Q4 2015, GSX will expand its offering of listing services to include the listing of ETIs. GSX will deliver a GSX Listing Code for Debt, Derivatives, and Asset Backed Securities, which complies with the current applicable legislation in Gibraltar for asset backed, debt and derivative securities. CONCLUSION GSX has identified a compelling business opportunity for Gibraltar to exploit its unique positioning and become a leading securitisation centre within the EU. The successful introduction of ETIs and asset-backed securities will trigger the development of an alternative, modern financial market for Gibraltar, which has a sound political, economic, and regulatory framework, with an attractive market and tax environment. ETIs have a bright future in Gibraltar. Q

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G I B R A LTA R 2 0 1 6

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

Moe Cohen is a founder and CEO of Benady Cohen & Co Group, Chartered Accountants, which includes Nexus Fund Administration Services. The group is also a member of Nexia International. Moe is a member of the executive board of GFIA and GSA and advised the Gibraltar government on the initial establishment of regulated funds in Gibraltar in 2004.

HFMWeek (HFM): What do you see as the most important factors promoting growth in Gibraltar’s fund industry? Moe Cohen (MC): Gibraltar is the newest of a number of European jurisdictions that has grown significantly over the last few years. It is very resilient, which has proven itself to also be very competitive in a number ways. In 2005, James Lasry, a prominent fund lawyer in Gibraltar, and I went to the government and offered the idea of a new industry – the fund industry. The government embraced this idea and within a year we had legislation in place, creating the foundation for what we now know as experienced investor funds. We had looked at a number of European and global jurisdictions and picked the best fund product for the European environment. This is the origin of the experienced investor fund. The main benefits of an experienced investor fund are: • Fastest to market: As long as the fund has been approved by the licensed parties, including fund administrators, directors and lawyers, the fund can begin to trade within 10 days. This is a big advantage commercially. If there is an opportunity in private equity, securities and instruments markets, time is of the essence. Being fast to market for a recognised fund is very important. • Gibraltar’s regulator is very competent and internationally recognised for its ability to provide guidance on any issues throughout the lifetime of a fund. This also means that if you have any queries, you do not have to wait a long time to get them resolved. The accessibility of the regulator and the two-way relationship one is able to have with the latter, are practically very advantageous. • From a competitive pricing perspective: Gibraltar is in a very strong position. An example of how we – Nexus Fund Administration – have benefited in this respect, can be seen through a BVI/Cayman struc-

ture, which was being administered and audited in Dublin. We were able to change the administrator to Nexus while keeping the existing auditor, which was a Big Four Firm. We were able to reduce costs with regard to professional fees by approximately 40%. This gives you an indication of how Gibraltar pricing differs from other jurisdictions. HFM: How is Gibraltar ensuring continued growth in its fund industry? MC: Gibraltar is a growing European fund jurisdiction building on its number of assets and industry players, continuing to command an excellent international reputation. Over the course of time we will see Gibraltar continuing to expand its position in the funds industry, particularly with the introduction of AIFMD. A number of things are currently being done to ensure growth continues in Gibraltar. First, we are obviously maintaining the advantages that I previously mentioned, which have enabled the industry to initially grow exponentially. There is significant marketing being undertaken by the Gibraltar government in conjunction with the industry. This has involved undertaking different conferences in different parts of the world, including conferences based in Gibraltar, where we have invited key players from the international market to come and hear about the benefits of the city. This has created quite a bit of attraction and truly helped to ensure Gibraltar is always on the map. Gibraltar has also efficiently implemented the AIFMD legislation. Gibraltar therefore offers, where relevant, AIFMD solutions to a number of different funds from a worldwide perspective. The fact Gibraltar has not ‘gold-plated’ the legislation and the rules are very similar to that of the UK, enables Gibraltar to become very competitive in the market in terms of legislation. It provides an avenue for AIFMD funds to set up in Gibraltar. In addition, the services available through the fund industry in Gibraltar,

GIBRALTAR IS A GROWING EUROPEAN FUND JURISDICTION BUILDING ON ITS NUMBER OF ASSETS AND INDUSTRY PLAYERS, CONTINUING TO COMMAND AN EXCELLENT INTERNATIONAL REPUTATION

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20 H F M W E E K . CO M

ACCOUNTING

with regard to AIFMD, ensure there can be continued growth in this respect. This general fund marketing as well as the ability to latch-on to the latest European legislation, will allow Gibraltar to continue to successfully grow this industry. HFM: What are the greatest challenges currently faced by your fund clients? How does Nexus Fund Administration help its clients to overcome these challenges? MC: Fund clients currently want a complete onestop-shop solution. Therefore they want their professional service providers to be as well-informed as they can be on different aspects of their fund and its workings. Benady Cohen & Co Group are chartered accountants and provide audit, tax advisory and fund administration services. We are not necessarily able to provide certain services to the same client, due to conflict of interest rules. However, when it comes to the audit of a fund we administer, we have the knowledge base to be able to prepare efficient

FUND CLIENTS CURRENTLY WANT A COMPLETE ONESTOP-SHOP SOLUTION. THEREFORE THEY WANT THEIR PROFESSIONAL SERVICE PROVIDERS TO BE AS WELL INFORMED AS THEY CAN BE ON DIFFERENT ASPECTS OF THEIR FUND AND ITS WORKINGS

â&#x20AC;?

and effective audit files for the auditor in a professional manner. The audit can therefore go through the all process very smoothly. Similarly, when we have Fatca considerations, we use the expertise of our tax department. We are able to provide funds with comprehensive services solution. On the other hand, if we are undertaking the audit of funds as a result of our fund administration knowledge, we are able to do so in a more effective way. The strong levels of experience across the different areas of our business adds value to the services we provide to clients. We have recently obtained a private equity, AIFMD depository licence. In a sense, this is an extension of the audit work that we undertake for our fund clients and it encompasses some fund administration work that we do. We are also looking to obtain an AIFMD manager licence, which will also serve as an extension of our expertise and serve to strengthen the services the Group provides to our current and future fund clients. Q H F M W E E K . C O M 21

S E R V I C E D I R E C TO R Y

GOVERNMENT AGENCY

PRIME BROKERAGE

G I B R A LTA R 2 0 1 6

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.

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.

STOCK EXCHANGE

Gibraltar Stock Exchange, Nick Cowan, Managing Director // T: +350 200 67822 // nick.cowan@gsx.gi // Philip Young, Finance Director // T: +350 200 67822// philip.young@gsx.gi // 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.

Hassans International Law Firm, James Lasry // T: +350 20079000 // james.lasry@hassans.gi 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.

FUND ADMINISTRATION

LEGAL

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

22 H F M W E E K . CO M

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.

Nexus Fund Administration, Moe Cohen // T: +350 200 74854 // M +350 546 98000 // mcohen@benadycohen.com 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 management, 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.

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 in Europe for investment funds and investment managers. It offers robust fund legislation, a favourable fiscal regime, an EU framework, efficient regulation, the flexibility of a small jurisdiction and quality infrastructure.

Experienced Investor Funds (EIF) An EIF is an authorised collective investment scheme exclusively for investment by experienced investors and is designed to invest in a wide range of traditional or alternative asset classes.

As an EU domicile, Gibraltar Finance provides investors ZLWKbGLUHFW DFFHVV WR WKH VLQJOH PDUNHW LQ ILQDQFLDO VHUYLFHV thereby enabling passporting throughout the member states of the EU. Gibraltar also presents both political and economic VWDELOLW\ WRJHWKHU ZLWK D SURIHVVLRQDO ZRUNIRUFH WUDLQHG WR international standards and full employment rights for EU/EEA and Swiss citizens.

Asset Management :LWK D TXLFN DQG HIILFLHQW UHJXODWRU\ SURFHVV $VVHW Management firms can establish themselves as a firm under WKH )LQDQFLDO 6HUYLFHV 0DUNHWV LQ )LQDQFLDO ,QVWUXPHQWV $FW 2006, or the Financial Services (Alternative Investment Fund 0DQDJHUV 5HJXODWLRQV 7KH $OWHUQDWLYH ,QYHVWPHQW )XQG 0DQDJHUV 'LUHFWLYH $,)0' ZDV WUDQVSRVHG LQWR *LEUDOWDU ODZ RQ -XO\ DQG LQYHVWPHQW PDQDJHPHQW ILUPV ZKLFK IDOO ZLWKLQ WKH 'LUHFWLYHĂ¨V UHTXLUHPHQWV FDQ PDUNHW DFURVV (8bPHPEHU VWDWHV

For more information visit the Gibraltar Finance website:

www.gibraltarfinance.gi

One of the attractions of Gibraltar as a fund domicile is that no regulatory approval is required before an EIF can begin to raise capital and commence its investment activities. An EIF may be launched based on a legal opinion that confirms that the EIF has met all legal and structural requirements for its operations, and provided that the fundâ&#x20AC;&#x2122;s documentation is submitted to the UHJXODWRU IRU UHJLVWUDWLRQ ZLWKLQ EXVLQHVV GD\V RI LWV ODXQFK