GUERNSEY (CHANNEL ISLANDS)

Futures funds can be set up in Guernsey as unit trusts or investment companies, either closed- or open-ended. Open-ended funds are regulated by the Guernsey Financial Services Commission (FSC) under the Protection of Investors (Bailiwick of Guernsey) Law 1987.

Closed-ended funds are regulated by the Advisory and Finance Committee under the Control of Borrowing (Bailiwick of Guernsey) Ordinances 1959 to 1989, although the FSC looks after all funds on a day-to-day basis.

Guernsey’s FSC has a wide responsibility, including protecting and developing Guernsey’s shares of the lucrative financial services industry. This means that only fund management businesses with pedigree and track record will be allowed to establish funds.

Open-ended futures funds are categorised in Guernsey as ‘Class B’ collective investment schemes and are governed by the Collective Investment Schemes (Class B) Rules 1990. These rules have a degree of flexibility which give the FSC discretion as to what conditions should be imposed on various schemes, taking into account particularly whether they are aimed at the retail, private client or institutional markets.

The Protection of Investors (POI) Law requires that every Class B fund has a designated manager and designated trustee or custodian and that these are different people and act independently of each other. They must also be incorporated, administered and have a place of business in Guernsey.

Closed-ended funds do not have these restrictions. They must instead obtain the consent of the Advisory and Finance Committee to raise money through the issue of shares.

JERSEY (CHANNEL ISLANDS)

Jersey funds are governed by the Collective Investment Funds (Jersey) Law 1988 and the Borrowing (Control) (Jersey) Law 1947 and the regulations and orders made under this legislation.

It is the Finance and Economics Committee in Jersey which has the power to control the establishment and regulation of Jersey funds and which exercises its power through the director of the financial services department (FSD).

Where a fund’s offer of units or shares is to a restricted and identifiable group of not more than 50 persons who are in receipt of enough information to evaluate the offer reasonably, and where the units or shares will not be listed on a stock exchange within one year following the initial offer, these offers are regarded as private placements and will not be subject to regulation under the 1988 law.

The investment restriction rules on public futures funds in Jersey closely follow those relating to Fofs and Gfofs in the UK, but in Jersey they are more in the way of guidelines and there may be room for some degree of negotiation. Generally, the lower the minimum investment level in futures funds, the more severely the FSD’s guidelines are applied.

Funds or their management will need track records in futures and each fund must have a management company and a trustee or custodian which are incorporated in Jersey and with an established place of business in Jersey.

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