Certified Funds Code of Practice - Schedule 3 (Jersey Listed Fund Guide)

Summary

This is Schedule 3 to the JFSC's Certified Funds Code of Practice, setting out the Jersey Listed Fund Guide. It defines what qualifies as a 'Listed Fund' under the Collective Investment Funds (Jersey) Law 1988 and sets out the structural, governance and disclosure characteristics such a fund must have to use a streamlined authorisation process (aimed at a 3 working day turnaround). Funds that do not meet the criteria can still apply, but may not benefit from the fast-track timeframe and may need case-by-case JFSC approval.

• Fund structure: A Listed Fund must be a Jersey-incorporated closed-ended fund listed on a Recognised Stock Exchange or Market, with at least two Jersey resident directors and a majority-independent board (including the chairman).
• Investment Manager vetting: The Investment Manager must meet good-standing, regulatory and financial soundness criteria, satisfy 'span of control' governance requirements (four-eyes or six-eyes principle), and confirm compliance in writing to the JFSC, counter-signed by the administrator or Manager after due diligence.
• Administrator/Manager duties: Every Listed Fund must appoint an administrator and/or Manager with Jersey resident directors, staff and physical presence, responsible for monitoring the Investment Manager, maintaining records in Jersey, and complying with the JFSC's outsourcing policy.
• Custody and borrowing: Adequate, disclosed custody arrangements are required; prime brokers to hedge funds need a minimum A1/P1 group credit rating (or prior JFSC clearance); borrowing above 200% of NAV requires additional disclosure and JFSC scrutiny.
• Auditor and accounts: An appropriately qualified auditor must be appointed, and audited accounts must be filed with the JFSC within seven months of the end of the fund's financial year.
• Offer Document: The Offer Document must comply with the Collective Investment Funds (Certified Funds - Prospectuses) (Jersey) Order 2012 (CFPO) and contain all material information investors would reasonably need.
• Fund service providers: Any Jersey entity acting as a fund service provider to a Listed Fund must be registered under the Financial Services (Jersey) Law 1998 and comply with applicable Codes of Practice.

An appendix sets out detailed 'span of control' governance expectations for Investment Managers, and another lists the Recognised Stock Exchanges or Markets on which a Listed Fund may be listed.

Key obligations

• A Listed Fund must be closed ended and listed on a Recognised Stock Exchange or Market to qualify for streamlined authorisation.
• At least two Jersey resident directors with appropriate experience must sit on the fund company board, and a majority (including the chairman) must be independent.
• The Investment Manager must confirm in writing to the JFSC that it satisfies the good standing and span of control requirements, with documentary evidence, counter-signed by the administrator or Manager.
• The administrator or Manager must notify the JFSC of any issue casting doubt on the Investment Manager's good standing.
• Every Listed Fund must appoint an administrator and/or Manager with at least two Jersey resident directors, staff and physical presence in Jersey.
• The administrator or Manager must monitor the Investment Manager's compliance with investment and borrowing restrictions and maintain sufficient records in Jersey.
• Any outsourcing by the administrator or Manager must comply with the JFSC's outsourcing policy.
• The board of directors must undertake regular reviews of investment strategy, risk profile and Investment Manager performance.
• Custody arrangements, including any prime brokerage arrangements, must be adequate and fully disclosed in the Offer Document.
• Where a hedge fund appoints a prime broker rated below A1/P1 (or long-term equivalent), prior JFSC clearance is required.
• An appropriately qualified auditor must be appointed for the Listed Fund.
• Audited accounts must be filed with the JFSC within seven months of the end of the Listed Fund's financial year.
• Any Jersey entity acting as a fund service provider to a Listed Fund must be registered under the Financial Services (Jersey) Law 1998.
• If borrowing exceeds 200% of net asset value, full details of risk management must be set out in the Application Form submitted to the JFSC.
• The Offer Document must comply with the CFPO and include all material information investors would reasonably require.

Applies to

Listed Funds, fund service providers, Investment Managers, administrators, Managers, auditors, prime brokers, distributors

Deadlines

• within seven months of the end of the Listed Fund's financial year: Deadline for filing audited accounts with the JFSC
• 3 working days of receipt of application: JFSC's aim to authorise a Listed Fund meeting the guide's requirements

Related documents

• This document is made under Collective Investment Funds (Jersey) Law 1988
• This document is made under Financial Services (Jersey) Law 1998