Gibraltar Stock Exchange (GSX) will start to list exchange-traded instruments (ETIs) from December 2015, and is in the process of positioning itself as an entry point to the European market for global fund managers, according to a roundtable of local professionals.
Having announced its first official listing in January 2015, the exchange also has plans to issue new codes in 2016, and expects to move in to equities and a new trading platform in 2017.
The new ETIs will be based on special purpose vehicles, which fall under European Central Bank regulation rather than the Alternative Investment Fund Managers Directive (AIFMD). This is intended to provide fast-to-market, more flexible, and more economic solutions for asset managers.
ETIs listed on the GSX will qualify for European Union (EU) passporting rights, giving small and medium-sized managers a structural footprint in to the EU at a lower cost than compliance with AIFMD.
Nick Cowan, managing director of GSX, said: “With AIFMD in the background, we found a natural place for GSX to start with technical listing open-ended funds, playing to our strengths as a smaller jurisdiction. This means that we should be able to be fast to market, we should be able to be economic, providing an attractive home for the smaller fund manager.”
“I see this as Gibraltar’s niche. The larger jurisdiction's small clients are in fact our big clients, and I think we as a jurisdiction offer a level of care and attention that perhaps you may not get at other jurisdictions for smaller sized funds.”
Joey Garcia, a partner and head of the funds and financial services practice at Gibraltar law firm ISOLAS, and chairman of the Gibraltar Funds and Investments Association, said: “When you look at the interplay between the global and European markets, I think it’s fair to say that international markets need access to Europe, and that is essentially one of our main selling points and one that distinguishes us from many other financial services jurisdictions.”
Gibraltar has been marketing itself as an entry-point to the EU for jurisdictions such as Hong Kong, Singapore and the US, as well as for closer non-EU countries such as Switzerland.
Fund managers domiciled in other global financial centres running, for example, an open-ended alternative fund in Cayman can list their fund on GSX, offering an input to the European market without the requirement to come onshore.
Garcia said: “For a working fund distribution solution in Europe, and for the long term, people need services and solutions that cater for funds and businesses of various sizes. If you are a billion-dollar manager doing well, situated outside of the EU, establishing an EU presence, then EU regulation of an AIFM compliant manager is not a major concern.”
“However, for the smaller managers, the firms where innovation really takes place, they are often struggling to raise assets and AIFMD has presented a real issue.”
Cowen commented: “Non-EU managers, particularly in Asia, see AIFMD as a problem. AIFMD presents a challenge, which is leading to managers potentially excluding Europe from their marketing plan.”
He added: “GSX can play a pivotal role in creating EU visibility that may in time provide the manager with the evidence needed to come onshore.”
