Top 'Take-Aways' from our Jersey Funds Updater
21 January 2020
Attendees had the chance to hear about the latest key developments and emerging trends having an impact on the industry on 16 January.
Thank you to JFSC Commissioner Mark Hoban, previously the Financial Secretary to the UK Treasury and currently a non-executive director of London Stock Exchange plc and chairman of the International Regulatory Strategy Group, who joined us as a guest speaker and provided his assessment of the regulatory direction of travel post-Brexit, for both Jersey and the UK.
Mark was joined by speakers from our own team who reviewed the global funds market performance and emerging trends across the asset classes and markets in 2019 and looking forward into 2020. They also gave an insightful analysis of the latest legal, regulatory and tax developments, international and domestic, following December’s UK general election.
1. Jersey faces a range of different challenges in the next decade to maintain its current strength and standing
Data sharing, climate change and demographics will all have impact on the jurisdiction's Financial Services sector and will need careful navigation. International standards are higher than ever before and Jersey needs to be assessed against these. Adherence to EU standards already sends a strong message to the rest of the world about Jersey's standing, but which standards should Jersey adopt post-Brexit if the EU becomes more inward-facing? Businesses will need to be ready and not complacent.
2. Jersey Funds Association members anticipating a busy 2020
The recent Members survey revealed positive sentiment in relation to Brexit outcomes and support for active industry engagement with the JFSC around fee ring-fencing. The impact of economic substance on the Jersey governance model and the increasing need to focus on outsourcing and technology as the industry develops are areas that will preoccupy fund industry professionals in 2020.
3. JPFs continue to thrive underlining Jersey's pedigree as a mature but flourishing funds domicile
The Jersey Private Fund (JPF) product continues to thrive, with almost 350 now launched since the JPF guide was introduced by the JFSC in April 2017. JPFs represent a highly cost-effective and swift (48 hour) regulatory route to market for new and existing managers and GPs.
4. It's going to be a strong year for RE funds and structures
The confluence of three factors point to a strong year for Jersey real estate funds and structures in 2020: (i) Preqin data for private capital funds confirms record fund-raising and substantive deal activity in the global real estate and infrastructure fund sectors in 2019; (ii) there's a likelihood of a post-UK election uplift in UK FDI as Brexit uncertainties reduce; and (iii) the continued availability of tax transparency for qualifying Jersey real estate funds and unit trusts following the recent changes to UK Non Resident CGT.
5. Updates to the economic substance guidance notes highlighted some new considerations
There remain areas for consideration by Jersey fund managers following the issuance of updated guidance, including entity classification, impact on some multijurisdictional fund management structures, governance best practice (including the directed and managed test), and the strict Jersey CIGA requirement for fund managers.
6. Fund managers are urged to use a clear pathway and set of rules to apply the Beneficial Ownership 3 Tier Test
The Test is consistent with international guidance. And puts Jersey on a level playing field with others who follow international standards. Our experience is that using a clear pathway and set of rules to apply the test, helps to ensure that it is consistently applied to reach the right outcome, even in relation to the most complex structures.
7. Urgent clarity is needed on recently revised data protection registration requirements
The 31 January 2020 deadline for registrations stipulated by the Office of the Information Commissioner is driving a need for urgent clarification on the certain DP issues, including the scope and practical registration requirements arising from the new registration regulations. Watch this space for further updates.