Cyprus as an in­vest­ment funds hub

Financial Mirror (Cyprus) - - FRONT PAGE - By Kevin Mudd

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).

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