Under the Mutual Funds (Amendment) Law, 2011 which came into force in December, certain master funds in the Cayman Islands will be subject to new regulations.
Master funds in open-ended fund structures have, in the past, typically been exempt (or structured so as to be exempt ) from registration under the Mutual Funds Law. However, under the Mutual Funds (Amendment) Law, 2011, certain master funds are required to register with the Cayman Islands Monetary Authority (CIMA) and submit to its regulatory oversight.
The proposal to regulate master funds has been driven by CIMA's desire for the Cayman Islands to remain at the forefront of good practice in hedge fund regulation and its wish to address a perceived gap in the regulation of Cayman Islands hedge fund structures.
This briefing explains who will be affected and what will be the impact of the regulation.