Listing an offshore mutual fund on the Cayman Islands Stock Exchange ("CSX" or "Exchange") is one way of making your fund more visible. For a fund sponsor or promoter a listing could translate into better communications or transparency with your shareholder base and of course potentially lead to an increase in net assets under management. The most common questions regarding a stock exchange listing are;
- Why should my fund be listed and
- If listed, Where?
A Stock Exchange Listing Provides:
1) Marketability
A fund becomes marketable when it achieves a degree of visibility on a platform that is generally accepted as being a reliable source of information, both financial, regulatory and statutory. Investors in a fund can look to one source to find the pricing of their particular fund, corporate actions, notices and other general information which is a substantial benefit to a fund sponsor with a geographically disbursed group of shareholders or unitholders. The reliability of information comes from the formal vetting process required by the fund's sponsors or operators (directors or trustees), listing agents, and of course, the stock exchange prior to the fund being admitted to listing and the discharge of the continuing obligations that the funds operators have under the prescribed listing rules.
2) Access to Institutional Investors
Certain Institutional Investor categories require in their constitutions that investments may only be made in listed securities. This particular requirement is especially true of many pension funds. Having your fund listed on a recognised stock exchange allows access to larger pools of capital than would otherwise be possible if the fund were unlisted.
3) Liquidity
In the case of closed-end funds, a stock exchange listing can provide a means of liquidity to this category of securities that may otherwise be difficult to trade freely. The readily available pricing can facilitate an informed buyer and seller to transact usually through the services of a stock broker.
Once a decision has been made to list, the question is where should the fund be listed. Clearly the answer to this question lies between your fund's target market for investors or new investors and a cost benefit analysis of the various exchanges world wide. For instance, if you are marketing your fund into a highly regulated jurisdiction such as Europe or North America, you may wish to consider an exchange in those jurisdictions. A listing in Luxembourg of a fund structured in compliance with the UCITS directives, for example, allows your fund a great deal of visibility in most of the European countries. There are also costs associated with listing which may outweigh the particular benefits to be listed in a certain jurisdiction. Also the rules and regulations vary from jurisdiction to jurisdiction and the time frame for listing a fund also varies.
In January of 1997, the Cayman Islands Stock Exchange commenced operations. Listing Agents and Broker Members were screened and appointed and by June of 1997 the Exchange was accepting applications for listings. At last count, 39 mutual fund entities or classes of shares have been listed on the Exchange and this number continues to grow as applications are being made on a weekly basis.
Why consider the Cayman Islands Stock Exchange for your Fund? For Qualified Investor Fund's (minimum investments per shareholder in excess of US$ 50,000), the CSX listing rules are very accommodating and the listing process is streamlined by the interaction of the local Listing Agent and the CSX Listing Executives. Once the Listing Document ("Prospectus") is finalised it is brought before the Listing Committee for approval. Approvals with conditions are granted to the exchange executives so that the fund may be listed once all the outstanding information has been made available to the Exchange. The process may take from two to six weeks depending on what information is required (usually audited reports). The listing application fee for mutual funds is US$ 2,000 and the annual listing fee is US$ 2,000.
The Cayman Islands Stock Exchange is a viable option for your mutual fund.
Bank of Butterfield International (Cayman) Ltd. is an approved Listing Agent to the Cayman Islands Stock Exchange and Butterfield Asset Management (Cayman) Limited is an approved Broker Member.
The content of this article is intended to provide general information regarding some of the Bank's business lines and services and the Cayman Islands regulatory environment. If you have any doubts regarding the information presented contact your legal counsel, financial advisor, stockbroker, listing agent, bank manager or accountant.
For more information regarding a listing on the CSX, please contact the following individuals at:
Bank of Butterfield International (Cayman) Ltd. P.O. Box 705 GT Grand Cayman Cayman Islands Niall R. Brooks (345) 914-5532 E-Mail: nrb@butterfield.com.ky Kelly F. Ireland (345) 914-5534 E-Mail: kei@butterfield.com.ky