The general benefits of listing a fund are that a listing increases a fund’s potential investor base and increases the visibility, marketability and prestige of the fund. The particular benefits of the CSX as a listing environment are as follows:
In 2004 the Board of the UK Inland Revenue (now known as HM Revenue and Customs) granted the CSX status as a “recognised stock exchange” under Section 841 of the Income and Corporation Taxes Act 1988.
Among the categories of securities a personal pension scheme in the UK can hold are securities listed or dealt in on a ‘recognised stock exchange’. Accordingly, CSX listed securities can form part of the investments held by such personal pension schemes.
This recognition enhances Cayman’s position as a jurisdiction with the regulatory and legislative framework necessary for the conduct of international finance and securities transactions. The CSX is also an affiliate member of IOSCO and a member of AIMA.
The CSX has dedicated pages on the Bloomberg Financial Markets Information Service. Therefore, through the CSX, the fund’s net asset value and investment profiles are available on over 80,000 terminals worldwide. To access this information type CSX
The CSX also has a dedicated website upon which listed funds current and historic NAVs and news announcements for listed funds are published. The CSX site can provide links to a fund’s own website or to other websites providing analytical information about the fund. There is no additional cost to the fund for using the CSX website; space on the site is provided to the fund as part of the CSX’s listing service. The CSX’s website address is www.csx.ky
Speed with which listing can be achieved
The CSX has committed itself to providing initial comments on a listing application within five business days, and a document turnaround time of three days thereafter. The Listing Committee, which is responsible for approving listings, will convene as often as necessary. With commitment on both sides to expediting the listing process it can realistically be expected to take between 3-6 weeks to list a fund.
From 2013 all funds listing on the CSX, whether closed- or open-ended, will have the ability for their shares to be traded on the CSX’s internationally recognised XETRA-based trading platform.
The listing fees of the CSX are highly competitive compared with those charged by other exchanges and there are discounts available for umbrella funds and fund families.
No minimum subscription level for funds
- International recognition
- Speed with which listingcan be achieved
- Trading facilities
- Competitive costs
- No minimum subscription
- No Investment policy restriction
- No local directors requirement
- Not bound by european directives
- No restrictions on redemptions
The CSX does not impose any minimum subscription level for funds although funds with a minimum subscription per investor of less than US$100,000 may be treated as ‘retail’ and be subject to additional requirements for a board comprising a majority of independent directors and a regulated investment manager.
No restrictions on investment policy
The CSX does not impose any investment restrictions on the investment policy of a fund, nor does it insist on any prescribed degree of investment diversification or prohibit newly incorporated funds from changing their investment policies for a specific period of time.
This gives the fund a great deal of flexibility and makes a listing on the CSX very attractive to funds offering highly focused investment strategies.
No requirement for local directors or board independence (except for retail funds)
The CSX understands that a fund’s operations may be based anywhere in the world and so, provided the fund operates within its local laws of incorporation, does not impose a requirement for its directors to be domiciled or resident in the Cayman Islands.
Although for funds open to retail investors the CSX requires the appointment of directors who are independent from the investment manager and other service providers this is not usually a requirement for other funds provided there is adequate disclosure in the listing document of any conflicts of interest.
No restrictions on redemptions
The CSX does not impose any restrictions on a fund’s redemption provisions provided that they are clearly disclosed in the listing document and shareholders are treated fairly and equally.
Flexibility - Not bound by European Directives
Unlike certain other exchanges, the CSX is not bound by any European Union Listing Directives and as a result can be considerably more flexible in its approach. Issuers and other advisers are encouraged to consult the CSX at any time for advice on special situations or in relation to the development of new products.
The general requirement is that a fund must
- appoint a listing agent (unless the application relates to a secondary listing)
- be domiciled in an approved jurisdiction
- appoint a suitable custodian
- appoint an independent auditor
- calculate net asset value at least quarterly
The directors must
- collectively, have adequate experience and expertise in the management of funds
- individually, take responsibility for the content of the listing document
The investment manager
- must demonstrate appropriate expertise and experience in the management of funds. Where the investment manager of the investment manager’s track record, as supplied by the listing agent. The CSX does not generally (other than for retail funds) apply a benchmark figure to determine the suitability of the investment manager. Each application will be considered on a case by case basis
The securities of all funds
- must be capable of being traded on an equal basis
- mustbe freely transferable except to the extent that any restrictions on transfer are approved by the CSX
- must be a separate legal entity from, but may be an associate of the fund, its directors, the investment manager or administrator
- if the custodian is not known to the CSX it must provide, through the listing agent, evidence that it is of good reputation and has the necessary experience to carry out its duties. If the custodian is a licensed entity in the Cayman Islands, this fact will be taken into account by the CSX
All service providers and directors
- must disclose any conflicts of interest that may arise in the operation of the fund and provide a clear statement of any cross-class liabilities
A feeder fund must
- restrict investment to qualified investors
- prove that investors will have access to sufficient information on the master fund
- invest in a listed master fund or one which is suitable for listing
A closed-ended fund must
- have 25% of listed securities in the hands of the public at all times
- include in its constitution the requirement for prior shareholder approval of material changes to the constitution or class rights; the creation of additional classes of security; material changes to investment policies, objectives, investment or borrowing restrictions; extension or termination of the fund and any intention to compulsorily redeem all securities
- Broadly, accounts prepared in accordance with UK or US GAAP or International Accounting Standards will comply with CSX financial information requirements. For funds which have been in existence for less than twelve months, the CSX requires an audited statement of the net asset value of the fund and its portfolio of investments. Funds that have not yet commenced operations are not required to produce financial statements
The general requirement is that a fund must include in its listing document all information necessary for an investor to make an informed investment decision. In particular the listing document must disclose details of the following:
- general information on the fund
- the securities for which application is being made
- redemption and valuation provisions
- the fund’s investment policy
- the fund’s directors and service providers
- risk factors and conflicts of interest
- fees and expenses
- the fund’s assets and financial position including audited financial statements where available
The fund must make certain documents available for public inspection including its constitutional documents, key service provider agreements and any financial statements.
There are additional requirements for umbrella funds, feeder funds, funds of funds, property funds and closed-ended funds:
- umbrella funds, feeder funds and fundsof funds must disclose details of underlying funds and any special risk factors or conflicts of interest
- property funds must include a portfolio valuation prepared under international standards by a qualified independent valuer
- closed-ended funds must disclose details of any substantial shareholders
General obligation of disclosure
A listed fund must notify the CSX immediately of any price sensitive information, material new developments or operational changes and any material change in performance or financial position for dissemination by the CSX.
Net asset value calculations
All net asset value calculations must be notified immediately to the CSX.
Interim and annual accounts
- Audited annual reports andaccounts must be sent to shareholders and the CSX within six months of the period to which they relate
- The annual report and accounts and any interim financial accounts published by the fund must be made available on request either in the Cayman Islands or at a place otherwise acceptable to the CSX
- Annual financial statements of umbrella funds, feeder funds and funds of funds must include financial statements for the underlying funds
- Property funds must include a summary of the portfolio valuation and details of significant transactions in the financial statements
Equality of treatment
The issuer must ensure equal treatment of all holders of the same class of listed shares.