New managed account regime for hedge fund managers
By Niamh Lalor Ogier Offshore Services – Jersey
The new qualifying segregated managed account (QSMA) regime has introduced an exemption which will enable Jersey-regulated fund managers to be appointed in relation to managed accounts. The exemption will enable fund managers that are already regulated under the Financial Services (Jersey) Law to carry out fund services business and service QSMAs without needing to seek additional regulation in order to conduct investment business under the Financial Services Law.
This exemption is a response to the continued growth in the number of Jersey-based hedge fund managers. As well as simplifying the regulatory position, it will allow QSMA managers to continue benefiting from the 0% corporate tax rate.
The proposed exemption recognises that those that use managed accounts in the hedge fund space are typically at the apex of investor sophistication. The QSMA regime will be open to managed accounts that meet the following criteria:
There is a minimum initial subscription of $1 million.
The manager is licenced to conduct fund services business as a manager, investment manager, trustee or general partner, and is appointed manager of the hedge funds.
The QSMA pursues hedge fund strategies that replicate, or are comprised of elements from, the hedge fund strategies currently employed by one or more funds to which the manager provides fund services business services. Further, the manager ensures that investors are treated fairly.
The manager file a notice with the Jersey Financial Services Commission confirming reliance on the exemption, together with payment of the annual fee. Further, the manager reports (on an ongoing basis) the number of QSMAs and the aggregate value of investments managed in the QSMAs.
There is a single investor (although this may include employees of the manager jointly or members of the same family jointly) that has received and signed a prescribed investment warning.
The Jersey manager is the only manager of the QSMA and cannot hold or otherwise have custody of the assets under management.
For further information on this topic please contact Niamh Lalor at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email ([email protected]). The Ogier website can be accessed at www.ogier.com
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