Cyprus as an investment funds hub
As Cyprus announces plans to reinvent itself as a financial centre we brought across possibly some of the most cynical industry experts we know , the board of the European Federation of Financial Advisers and Financial Intermediaries (FECIF), to get their impressions.
FECIF board members juggle their lives between lobbying the EU Commission, Parliament, Council and their own national regulators, for better, workable regulation. They also look after the interests of the 300,000 EU intermediaries that they represent. These guys know the industry inside out.
We co-ordinated a couple of seminars to enable FECIF to engage with the Cyprus financial industry.
The first seminar titled “An Audience with FECIF” offered FECIF the opportunity to share experiences with members of the local intermediary organisation CIFSA and the Regulator.
The Chairman of the Cyprus Securities and Exchange Commission (CySEC) Demetra Kalogerou opened the session reaffirming the main objectives of her office, to ensure the Cyprus securities market as one of the safest, most reliable and attractive destinations for investment, whilst meeting a commitment of effective supervision and highest levels of investor protection. The Chairman believes that Cyprus regulated firms can compete with the best firms within Europe.
Following the financial crisis the Chairman and her staff, with the support of the government, has ensured that Cyprus continues to grow as a European financial centre.
FECIF Chairman, Johannes Muschik provided an overview of the work FECIF do both at the EU commission and with EU politicians on behalf of their members; lobbying for practical regulations that protect the investor and the industry, with work often started five years or so before most industry practitioners are aware of the threat. In particular he emphasised the need for CySEC to be pragmatic in how EU regulation cascaded down to Cyprus is implemented and for the need to avoid “gold plating”.
The following day FECIF participated in the first Cyprus Funds Summit – “Cyprus as an Investment Funds Hub”.
President Nicos Anastasiades opened the event confirming his government’s commitment to see Cyprus as one of the safest, most reliable and attractive destinations for investment. The President was keen to i mpress on delegates the importance of the development of a wellregulated and profitable funds industry to attract capital back to Cyprus.
A FECIF panel discussion, Chaired by myself, was held to discuss the challenges of cross-border fund distribution – a matter where the EU has not quite levelled the playing field. The FECIF members shared their knowledge and expertise of the EU rules and of how these apply in reality. The picture painted was not encouraging; however, the FECIF members offered some practical suggestions and their support to any Cyprus firm that may require it.
The 380 local and international delegates were then updated by experts from both Cyprus and abroad on developments within the industry and the opportunities as well as challenges which lie ahead in the road to Cyprus becoming an Investment Hub.
The key strengths of Cyprus were identified as: an EU member state; a common law jurisdiction with extensive double taxation treaties; strong low cost service industry; close proximity to Asia, Africa and the Middle East; commitment to establishing a funds industry backed by government and regulator.
The summit recommended that Cyprus plays to its strengths, adopting an initial focus on closed ended funds such as private equity, real estate, infrastructure and other illiquid assets; targeting institutional investors. It identified real potential for a jurisdiction which understands and focusses on these asset classes and structures. Our sceptical experts were impressed. Johannes Muschik, Chairman of FECIF, stated: “Cyprus has a relatively young investment industry but if the industry, the regulator and the government continue to work together on the appropriate regulatory and structural changes, Cyprus could become a new hub for fund business.”
Vincent Derudder, Honorary Chairman of FECIF stated: “These were two well organised events, easily on a par with others I have attended in the major European centres. We were able to meet and engage with the Cyprus financial services industry at all levels. I am impressed with the way they are working together and their commitment to a common goal, they know what they need to do and have no doubts that they will achieve it.”
As a board director/ member of FECIF, CIFSA , CIFA and as CEO of KMG Capital Markets I was already sold on Cyprus, we moved our AIFM business, managing 18 funds comprising EUR 500 million under management, here from Luxembourg at the beginning of this year, we use the AIFM passport to structure and manage funds anywhere in Europe; I would like others to see and share the advantages Cyprus has to offer.
The Cyprus Funds Summit, was organised by CIFA, endorsed by EFAMA and took place under the auspices of the Ministry of Finance and the Cyprus Investment Promotion Agency (CIPA).