Cyprus Funds Industry One of Fastest Growing Sectors

The Cyprus Investment Funds Association (CIFA) only just celebrated its inauguration on July 8, 2014. And, yet, says President of CIFA (and Chairman and Head of Tax and Corporate Services KPMG), Angelos Gregoriades, there is a lot of work to be done.

“In promoting the industry, we need to follow the market growth patterns and see what Cyprus can do to take advantage of it,” Gregoriades notes.

Recent industry studies, he explains, suggest that global assets under management will increase by more than 40% by 2020, with growth being driven by the increase in global wealth and the rise of investment bases in emerging markets.

Assets under management in emerging markets such as South America, Asia, Africa, and the Middle East economies are set to grow faster than the developed world, creating new pools of assets that can potentially be tapped by the industry.

Cyprus can play a unique role considering its proximity to these markets,” Gregoriades explains.

Rising asset under management, however, are coupled with rising costs of compliance.

Gregoriades notes: “Cyprus provides a competitive solution to this, with a regulatory framework that has responded to the global changes coupled with the offering of a cost and tax efficient operating model for asset managers.”

Another important development, he notes, is that asset management is moving onto the centre stage of the financial services industry.

However - and especially in Cyprus, Gregoriades stresses - the asset management industry needs to further develop trust within the broader community by demonstrating they can serve the requirements of their clients as well as the broader economy by acting at all times in the best interest of clients.

Turning to Cyprus, Gregoriades underscores the fact that the Cyprus funds industry has been one of the fastest growing sectors in the local financial services industry, with assets under management having more than doubled in the last three years.

“The goal,” Gregoriades states, “is to double this figure - at least - over the next three years, which is achievable when looking at the historical activity coupled with the major developments in the legal and regulatory framework, especially the enactment of the Alternative Investment Funds Law in July 2014.”

Rendering its legal framework complete, Cyprus now has an EU harmonised regime governing UCITS funds and management companies; and EU harmonised regime governing AIFMs; and an updated regime governing AIFs competitive to that of other major jurisdictions.

Looking at the major features of Cyprus’ investment funds (AIFs and UCITS), Gregoriades explains that both legislations provide for corporate governance and investor protection and information.

In this quest to develop and promote this industry, Gregoriades explains that CIFA’s mission very much balances on acting as a single unified representative body of the industry, on providing knowledge building, on encouraging maintenance of industry standards and professionalism, and on being engaged in the development of related regulatory aspects.

CIFA’s achievements during 2014 are multifarious, Gregoriades notes, spanning holding its members’ first meeting in January 2014, becoming an observer of EFAMA in June 2014, hosting a launch event at the Presidential Palace in July, and accepting 45 legal entities and 95 physical persons as members, as of September 2014.

Moreover, it has instigated the issue of a quarterly newsletter, initiated dialogue with local educational facilities and professional associations, established a code of conduct providing a framework for high-level principles, and played an active role in the development and enactment of the alternative investment funds law.

“So what further work is needed on an internal level,” Gregoriades asks.

“Succinctly, we need to enhance the awareness globally of Cyprus’ attractiveness as a jurisdiction in an effort to attract a number of international players to establish investment funds and/or asset management firms in Cyprus. We also need to create and maintain a strong legal, tax, and regulatory framework, to offer an attractive and competitive product. And, finally, we need to set up an ad-hoc working group between the Ministry of Finance, Tax Administration and CIFA, which will discuss the work of CIFA’s tax committee on a quarterly basis.”

None of this, Gregoriades stressed, can be achieved easily without support on a national level, listing political stability, cost competitiveness, tax efficiency, and a strong banking system as being crucial. Moreover, he suggests that the island needs to improve the early adoption of new laws as well as amendments, its expertise and experience in servicing investment funds, and strengthen its regulatory resources.

“In conclusion,” Gregoriades states, “CIFA aims to continue to work closely with the Government, legislators, our members and industry participants to ensure that we support the Cyprus fund industry and the wider economy as a whole in a constructive way.”

SOURCE: GOLD NEWS

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