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Cayman proposes greater hedge fund disclosure

Published 06/22/2009, 10:26 AM
Updated 06/22/2009, 10:33 AM

* CIMA may reveal fund directors, manager, administrators

* Pressure grows globally for hedge fund disclosure

* Fund closures fall to pre-credit crisis levels

By Laurence Fletcher

LONDON, June 22 (Reuters) - The Cayman Islands, home to most of the world's hedge funds, is planning to reveal more information about them, the country's regulator told Reuters, as pressure on the secretive industry rises.

The Cayman Islands Monetary Authority (CIMA) could make available data such as a fund's directors, manager, auditors and administrator, an executive said.

Earlier this month, the offshore centre joined the global regulatory body IOSCO (the International Organisation of Securities Commissions), which on Monday backed compulsory registration of hedge fund managers.

"We have heard great discussions by the G20 countries and international standard setters to enhance the transparency in the hedge fund industry," Yolanda McCoy, head of CIMA's investments and securities division, said in a recent interview.

"The authority has received numerous requests from stakeholders such as investors, investments managers and regulators for greater fund data."

McCoy also said hedge fund terminations hit a record high of 600 a month in December but have since fallen back to pre-credit crisis levels, and there were 39 in the latest month.

Currently the Cayman Islands, a British overseas territory, only discloses information such as a fund's licence number, its regulatory classification and the date it was authorised.

The move comes as global watchdogs push for tighter regulation of the $1.3 trillion hedge fund industry and greater co-operation and disclosure from offshore centres in the wake of the Group of 20 leaders' meeting in April.

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CIMA, which authorises almost 10,000 hedge funds, plans to consult the industry on the steps and would make the information available towards the end of the year.

The extra information could, for instance, help investors in hedge funds quickly decide whether a fund had adequate corporate governance. "In an era where there is greater public scrutiny (of hedge funds) ... I think it can do nothing but enhance Cayman's reputation," said Mark Lewis, senior partner at law firm Walkers Global and chairman of the Cayman branch of hedge fund body the Alternative Investment Management Association.

He said that in future Cayman hedge funds could also disclose financial information quarterly or monthly. (To read the Reuters Hedge Fund Blog click on http://blogs.reuters.com/hedgehub; for the Global Investing Blog click on http://blogs.reuters.com/globalinvesting/)

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