The Cayman Islands Monetary Authority (CIMA) announced yesterday that it has been formally admitted as an ordinary member of the International Organization of Securities Commissions (IOSCO). At the same time CIMA officially became a party to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information, which is the benchmark for international cooperation among securities regulators.
IOSCO is the pre-eminent international standard setter for securities markets, and membership is widely sought after by securities regulators. The Organization's membership regulates more than 90% of the world's securities markets in over a hundred jurisdictions.
CIMA's admittance as an IOSCO full member is expected to have practical implications as it will remove impediments for Cayman investment vehicles to be used in those countries in which the regulatory regime would only allow investors to invest in vehicles regulated by an IOSCO member jurisdiction. It is also expected that this admittance could have a positive impact in many key emerging markets, including Latin America and India, where regulators consider IOSCO membership to be an important element for recognition of foreign registered funds.
This could be particularly true in Brazil, where a series of Instruções, starting with Instruções No 450 and 456 in 2007, followed by Instrução 465 in February 2008 issued by the Comissão de Valores Mobiliários (CVM) (the Securities and Exchange Commission) established the modern regulatory framework which allows Brazilian investment funds to invest a portion or the total amount of their assets abroad provided that certain requirements are met. Regulation by an IOSCO ordinary member would be a significant advantage in meeting those requirements.
This recognition follows the recent Memorandum of Understanding entered into between CIMA and Brazil CVM and further strengthens the relationship between two key jurisdictions in the global funds market.
With this development, the Cayman Islands joins the British Virgin Islands as an ordinary member of IOSCO. The Cayman Islands and BVI have further strengthened their collective position as the most popular jurisdictions for the establishment of offshore investment funds, having between them approximately 85 - 90% of the regulated offshore investement fund market.