China looks at Guernsey’s fund wisdom for fledgling sector


The central government has turned to Guernsey for advice on regulatory development for its fledgling fund industry.

Fiona Le Poidevin
Fiona Le Poidevin

Guernsey Finance chief executive Fiona Le Poidevin said China’s central government is interested in mining the island’s knowledge in this area.

“The Shanghai Financial Services Office in many ways wants to replicate the systems we have in place in Guernsey to operate and regulate the funds sector,” said Le Poidevin. Guernsey Finance is the promotional agency for the island’s finance industry.

The Guernsey-based International Administration Group (IAG) is at the centre of discussions with the Shanghai Financial Services Office, the body tasked by China’s central government to develop an effective regulatory regime for private equity and hedge funds. IAG is an international fund administrator licensed by the Guernsey Financial Services Commission (GFSC) to administer open and closed-ended funds on the island.

Julian Carey, the managing director of IAG’s Hong Kong office, told China Business Law Journal that Guernsey had impressed the Shanghai Financial Services Office for three reasons: Guernsey’s flexibility in fund regulation; its reputation as a quality jurisdiction that has developed the fund regime for a long time; and the island’s success in attracting and serving international fund business.

According to IAG, Guernsey allows the operation of various types of funds, including private equity funds, hedge funds, listed equity funds, derivatives funds, funds of funds and debt funds.

In addition to fund regulation, fund administrators, custodians and managers are also regulated.

Funds and service providers are subject to the Protection of Investors (Bailiwick of Guernsey) Law 1987 (as amended). Certain restricted activities as defined by the law require service providers to hold a licence issued by the GFSC.

Licensed service providers carry specific obligations for open-ended funds as set out in the Licensees (Conduct of Business) Rules 2009.

Carey said another important factor for the success of Guernsey’s fund system is that “within this regulatory framework there is a great deal of local expertise. Many of the industry professionals on the island have decades of experience and have grown up with the industry.” subscripton ad red 2022