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Caymans Says ‘No’ To Hedge Fung Regulations – For Now

Date: Friday, April 27, 2007
Author: Hedge Fund Daily

With hedge funds contributing a significant portion of the economy of the Cayman Islands, you can’t really blame its government for not wanting to rock the boat by imposing stricter regulations on them – at least not until everyone else does. "I think it would be premature for us to do anything because learning is still going on," Timothy Ridley, who chairs the Cayman Islands Monetary Authority, told Reuters.

Ridley said it would be "counterproductive" for the island nation "to move ahead of the curve." His goal, he says, is "to be right there with everybody else." One would think that the place where an estimated 8,500 of the 9,000 global hedge funds are domiciled would relish the role of spearheading the drive to rein in the hedge funds. But no, says Ridley, that’s the job for the places where the action is, such as the U.S., the U.K. and Europe.

"Most of the risk," Ridley noted, "is in New York, Tokyo and London." Recognizing that critics often point to the Caymans as a haven for tax cheats and in general say offshore financial centers are to blame for the hedge fund problems, Ridley says he is willing to let those prickly comments wash over the islands like a cool wave. "Reputational risk is obviously very high in the mind of the Cayman government and obviously of the monetary authority," Ridley concluded. "But you just have to be comfortable in your own mind that you’ve set your level at the appropriate level that meets what you consider to be international standards."