The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Securities Commission’s latest agreements with counterpart regulators have prevented the Bahamian investment funds industry being “shut out” of the European Union’s (EU) capital markets, a Cabinet Minister said yesterday.

Hailing the Memorandums of Understanding (MoUs) that the Bahamian regulator has signed with its EU and European Economic Area (EEA) counterparts, Ryan Pinder, minister of financial services, said they had prevented the funds industry from being “handcuffed”.

The agreements, which will allow Bahamas-based funds and their managers/sponsors/promoters to continue marketing to, and soliciting, EU-based clients, are likely to also boost Mr Pinder’s drive to encourage investment advisers to establish a physical presence in this nation.

“It’s a significant development,” Mr Pinder said of the Securities Commission’s bilateral regulatory agreements with Europe.

“It causes Bahamas-based fund promoters, and managers of Bahamas-based funds, to continue to promote and market and capture investments from inside the European market.

“It’s a very important development, given the concentration of European institutions, particularly Swiss institutions, in the Bahamas.”

The Securities Commission’s MoUs, which Mr Pinder said were concluded just inside the deadlines set by the EU, effectively protect - and maintain the status quo - for the Bahamian alternative investment funds industry in terms of European access.

Apart from mutual funds, other investment vehicles set to benefit from the MoUs are Bahamas-based hedge funds, private equity funds, real estate funds and other institutional funds.

Another beneficiary will be Bahamian SMART funds, the one investment fund product that has seen strong growth, and represents a key private wealth management tool for the financial services industry.

Acknowledging the potential benefits for his plans to grow the investment funds sector, Mr Pinder told this newspaper: “More and more so, this is an area of focus for us to get investment advisers to base themselves in the Bahamas.

“If we weren’t able to secure the MoUs with the European counterparts, that would handcuff our advisers who use SMART funds and other funds as investment vehicles for European clients.

“If we didn’t achieve the MoUs, the European market would essentially have been shut off for our funds industry. Even though we’ve been focusing a lot on Latin America, the European market is still important for us, as we have a lot of European clients.

“It’s a significant development as we continue to market the funds industry in the Bahamas. A lot of these banking institutions utilise funds in their private wealth management structures.”

Describing the European agreements as “another milestone in the advancement of the financial services sector”, Mr Pinder said the episode was another reminder that the Bahamas had “to be nimble” to both maintain, and secure, a competitive advantage.

He added that the Government’s goal was “putting the private sector in the best position possible to advance the Bahamas as a jurisdiction, and this is another element of that”.

Mr Pinder said the Government had “recognised” the investment funds industry’s potential regulatory issues with the EU early in its administration, and had begun discussions with the Securities Commission to resolve the matter some six months ago.

“The MoUs were initiated prior to the deadline, allowing our funds to be marketed to European clients,” he added.

The European MoUs set standards for co-operation and cross-border supervision, making the oversight of alternative investment funds more consistent and strengthening investor protection.

The European Securities and Market Authority (ESMA) negotiated trhe MoUs on behalf of EU and EEA members. The agreements were signed on the Commission’s behalf by its chairman, Tonya Bastian-Galanis.

The Securities Commission’s executive director, Dave Shannon Smith, said: “Entering these agreements marks another significant step taken by the Commission to be responsive to international developments in delivering on its mandate under the Securities Industry Act 2011 to promote conditions that facilitate the orderly development of the capital markets.

“Not only do these agreements allow for Bahamas-based alternative fund managers to access the European markets represented by the regulators the Commission signed with, but they allow the Commission to demonstrate to audiences locally and abroad its commitment to maintaining international best practices in regulation and the protection of investors globally.

“It augurs well for the jurisdiction’s funds industry and the broader financial services industry as well.”