Island economies and their infrastructure: An outlook 2010 and beyond

The first of its kind report on Island Economies provides a comparative analysis of the state of the infrastructure challenges currently being faced by island economies. Key findings include:

- Current annual expenditure budgets in many island jurisdictions would not meet the infrastructure funding needs for the next five years
- The state of the infrastructure in those island economies surveyed is average or below average
- A lack of clear long term strategy and central management was identified in almost all jurisdictions surveyed
- A lack of human resource capacity for the delivery of projects was identified
- Infrastructure execution in most island jurisdictions is generally inefficient

The research was conducted using data and analysis from a third party agency, Island Analysis. Findings were drawn from 16 islands as well as one to one interviews with 40 government officials and KPMG professionals. Key areas of focus included an in-depth review of policy and strategy, procurement, financing and the execution of public sector projects.

Download now

Mauritius : Investment Mission to India

An investment mission was organized from 17 to 22 January 2010 in India targeting New Delhi and Mumbai. The mission was led by the Vice Prime Minister, Minister of Finance and Economic Empowerment, Dr the Hon Rama Sithanen. The Managing Director of the Board of Investment and the Chief Executive of the Financial Services Commission formed part of the delegation.

The objectives of the investment mission were to:

* Reinforce the image of Mauritius as a reputable and attractive financial services centre, with modern legal and regulatory framework for global business;
* Increase awareness of Mauritius opportunities as a financial platform for outbound investments from India, particularly to African Countries;
* Encourage Indian financial intermediaries to set up in Mauritius to manage their global business ;
* Promote investment opportunities in Mauritius namely in the ICT/BPO, pharmaceutical and healthcare as well as real estate and property development; and
* Sensitise Indian investors about the possibility of using Mauritius as a gateway for penetrating the Eastern and Southern African markets.

In New Delhi and Mumbai, plenary sessions on Financial Services were organized and were attended by more than 100 operators in the financial services sector i.e financial advisors, lawyers, accountants, private equities, funds and banks. Reassurance was given to investors during those sessions on the jurisdiction and they were invited to look at the possibility for them to manage their business out of Mauritius instead of structuring their investment through Mauritius. The idea was positively received by the members present. The VPM also re-emphasized the importance of using Mauritius as a financial platform for outbound investments for emerging markets and particularly to African Countries.

Many of the leading funds, private equities and banks such as ICICI Venture Fund, Rabo Private Equity Advisors, Chrys Capital, Redfort Capital, CX Partners, Baring Private Equity, Religare Advisory Services, Yes Bank, Mefcom Capital, IDFC, Amarchand & Mangaldas, JM Financials, IL&FS, Aditya Birla Asset Management, Birla Sunlife, 3i Capital, Bajaj Capital and Citi Bank attended the event.

Besides reinforcing our image as a reputable financial center of substance, the mission also aimed at creating awareness on the other investment opportunities. Investor Roundtables were organized in both Delhi and Mumbai to promote the opportunities in the ICT/BPO, real estate and hospitality as well as pharmaceutical and healthcare. The Roundtables, structured as interactive sessions, were moderated by either experts in the respective field and media people. Indian investors that are already present in Mauritius were invited to share their views and experience that they had in the country.

The ICT/BPO roundtable was moderated by Mr Gaurav Gupta, Country Head from Everest Consulting and had as panelist the VPM, the MD of BOI and Mr Raman Roy from Quattro. Emphasis was placed on the growth of the BPO sector in Mauritius, its contribution to the economy and how Mauritius has moved from voice-based BPO and contact centres to high value-added activities such as Financial, Legal , Medical BPO, Software Development, Multimedia Development, Data Centres for Business Continuity and Disaster Recovery which represent today 60 % of the activities. It was also pointed out that the package for ICT/BPO in Mauritius is attractive: it is a blend of cost-competitiveness with service quality, adaptability and flexibility. Our strength also lies in our bilingualism and our simple and low fiscal regime. Some of the leading ICT companies like Fidelity Business Services, Genpact, NewGen, Microsoft and Tata Consultancy attended the roundtable.

The Real Estate and Hospitality roundtable was moderated in Delhi by Mr Tejeesh Behl, Corporate Editor of Mint and in Mumbai by Mr Ashok Advani of Business Today. Mr Gautam Raj, EVP Strategy and Development of the Oberoi Group was part of the panel in Delhi and shared the good experience that the Group had in Mauritius. He also announced that the Oberoi Group is expanding its presence in Mauritius by developing an 80-room hotel around the wellness and spa concept in collaboration with a local partner.

In Mumbai, Mr Philippe Kalkaria from Tata Realty shared his experience with the members present.

Many leading property developers and investors in the hospitality sector as well as infrastructure such as DLF, ITC Welcome, Rajeha Developers, Unison Hotels, Gammon Infrastructure and Vishal Infrastructure attended the roundtables.

The Pharma and Healthcare roundtable was attended by around 20 companies mainly in the pharmaceutical sector and research and development. The session was moderated by Dr Milind Atani from Nishith Desai Associates and Mr Sanjeev Vashista from Fortis shared his experience on the panel. Emphasis was placed on the development of a fast growing healthcare and lifesciences industry in Mauritius. It was also highlighted that the country is on its way to become a healthcare, wellness and medical outsourcing hub par excellence, supported by a strong pharmaceutical, biotech and medical devices industries, and driven by high-end biomedical research and innovation.

The delegation also had an extensive interaction with the press during their visit. There is currently a wrong perception in the Indian Press that Mauritius is being used to launder illegal and illicit money and our international financial centre is also perceived as being a tax haven. It is, therefore, essential for Mauritius to remove that negative perception and to be actively promoted as a Global Business Jurisdiction of Substance. This is very important so as to reassure the business community as well as to reinforce our position on the Indian market. The delegation engaged extensively with the press and stressed on the fact that Mauritius is a clean jurisdiction, is well regulated and the measures taken to reinforce the image of Mauritius as a jurisdiction of substance was also highlighted. The extensive interaction with the Press was widely reported in the following papers: Indian Express, Times of India, Economic Times, Business Standard, the Hindu, Financial Times, CNBC TV 18, UTVI Bloomberg and ET Now.

Sukuk & Islamic Capital Markets by Prof. Monzer Kahf

Description:

Sukuk, or Islamic fixed-income securities have emerged over the past 5 years as an increasingly important asset class as Islamic capital markets are experiencing phenomenal growth. Unique among conferences of its kind, the Sukuk & Islamic Capital Markets Conference is the only event focusing exclusively on the Islamic capital markets and is a must-attend for players across the entire capital markets spectrum at Islamic and conventional banks, private equity houses, project financiers, institutional investors and hedge funds. This is a highly practical 4 day course delivered by industry expert Prof. Monzer Kahf.

Objectives:

Provide an in-depth understanding of the Islamic capital market, its structure and growth.
Understand Islamic securities, their nature and why and how they are introduced.
Know who issues Islamic bonds and the market demand for them.
Discuss the various structures of Islamic Sukuk, their market rating and the legal and Shari’ah issues involved with them.
Understand issues involved in converting conventional bonds into Islamic securities.

Who should attend:

Legal advisors
Islamic finance professionals
International bankers and financiers
Regulators
Venture capitalists

When: 17, 18,19 & 20 Feb 2010

Where: Four Points, Ebene, Mauritius

How to register:

Phone: +230 290 5050/ +230 670 9744

Fax: +230 290 5060 (By completing the registration form which can be downloaded here)

Email

Website: Register online by clicking the Register link

Post: Mail your completed registration form along with payment to: Multievents Ltd, Angle Rues Ritter et T. D'Arifat, Curepipe

About Dr. Monzer Kahf

Dr. Monzer Kahf is a Consultant/Trainer/Lecturer, Islamic banking, finance and economics and is currently working as an independent Consultant/Trainer on Islamic Banking, Finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic Economics, finance, Islamic transactions (Mu'amalat). His consultations include: drafting and reviewing Shari'ah contents of Islamic finance agreements, by-laws and operational systems for Islamic financial institutions in the USA, Canada, Trinidad, Nigeria and Guyana, consultations to lawyers, companies and individuals on Islamic aspects of financial transactions, Islamic wealth management and estate planning, providing expert opinion to courts on matters related to Islamic laws for financing, banking and Awqaf, whereas his training several copyrighted modules in Islamic Banking and finance that include: "Islamic Sukuk and capital markets," "risk management and compliance with Basel II Accord," "Shari'ah-based wealth management," "financial engineering in accordance with Shari'ah," "conversion of conventional securities into Islamic securities," "structuring Islamic financial products," "fundamentals of Islamic banking and finance," "Islamic estate planning," "Islamic Leasing," Takaful and Insurance," "Islamic Wealth Management," Islamic Estate Planning"

FSA outlines latest steps to address corporate governance at firms

The Financial Services Authority (FSA) has today issued a Consultation Paper (CP) on effective governance standards within firms.

As part of its supervisory enhancement programme, the FSA places greater emphasis on the role of senior management at firms. Since adopting this approach in 2008, the FSA has carried out 332 significant influence functions (SIF) interviews, with 25 candidates withdrawing from the process.

The FSA has issued a number of publications in this area, including a ‘Dear CEO’ letter in October 2009, which clarified its approach to approving and supervising persons performing SIFs. This CP explains this more intensive process in greater detail, but also makes clear that the intention is not to deter strong candidates from pursuing senior roles in firms.

Graeme Ashley-Fenn, FSA’s director of permissions, decisions and reporting, said:

"Our more intrusive approach continues to place a great deal of emphasis on governance and therefore the senior management at firms. This starts with a firm’s own due diligence. Our experience shows that once a firm gets its corporate governance right; with a strong and effective board, everything else flows from that."

Walker Review

The proposals implement the FSA-specific recommendations in Sir David Walker’s review of corporate governance published in November last year. Where appropriate, listed banks and insurers are now strongly encouraged to establish board risk committees and appoint top executives as chief risk officers.

Sally Dewar, managing director of the FSA’s risk business unit, said:

"We have been very clear about our more intensive supervisory approach of firms and individuals, and our renewed focus on the quality of governance. We were fully supportive of Sir David's recommendations and this CP sets out how we intend to deliver them through our ongoing supervisory work and authorisation processes."

Enhancing the SIF regime

Underpinning this intrusive approach, today’s paper consults on extending the scope of the SIF regime and introduces a new, more detailed framework of controlled functions. These will make clearer the exact role an individual is performing within a firm and increases the FSA’s ability to vet and track individuals as they move role. The FSA is also extending the regime to capture more individuals from parent companies who exert significant influence upon a UK regulated firm.

The consultation period closes on 28 April 2010. The FSA hopes to have final rules in place during the third quarter of 2010.

Link to the Consultation Paper

UK backs automatic tax information exchange

UK Treasury's Financial Secretary Stephen Timms has urged OECD member countries to adopt global automatic exchange of information about tax and beneficial ownership.

"In an environment where tax revenues have been hard hit by recession, governments are taking a much tougher line on tax evasion," Timms told the OECD Tax & Development Conference in Paris today (28 January).

He also offered support to the currently popular idea that multinationals should adopt country-by-country financial reporting. The OECD should draw up guidelines for companies that adopt the practice, and also for transfer pricing, he said.

"There should be transparency about where companies earn their profits and where they pay their tax," Timms said. "For people and companies to be part of the global economy, they have to be willing to provide tax information."

The UK is keen to draw developing countries into the new framework of international tax information exchange agreements that has evolved in the last two years. Timms claimed this would be in developing countries' interests: not only do they lose at least $50 billion each year in corporate profit sharing and evasion by individuals, but they also need to show co-operation with developed countries in order to receive financial aid.

Timms also announced that the UK is planning to sign at least one multilateral tax information exchange agreement by the end of this year.

Conyers wins international award for investment funds work

Conyers Dill & Pearman was named Best Law Firm in Bermuda for investment funds work at this year's Fund Domiciles.com Service Provider Awards, held on January 14 at the Chesterfield Hotel in Mayfair, London.

The awards recognise leading fund service providers in major jurisdictions around the world and follow nominations from industry peers, with the winning firms selected by a panel of judges who have many years of experience in dealing with organisations in various fund domiciles.

Conyers has an extensive funds practice and advises on a full range of open-end and closed-end funds and investment vehicles in corporate, unit trust and partnership form. Over the past year, the Bermuda Funds Team has worked on a number of high profile cases, including advising funds in distress, with a focus on redemption gates, NAV suspension provisions, in kind redemptions and side pockets.

With a global presence in major financial centres, Conyers provides international clients with access to Bermuda, which is an established centre for mutual funds, bond funds, hedge funds, private equity and multi-manager funds as well as other sophisticated investment vehicles, many of which are listed on the world's stock exchanges.

The past year has seen significant expansion across the firm, which now comprises 600 staff with over 150 lawyers located in 11 offices worldwide.

Fund Domiciles.com provides a comprehensive source of information on the world's international fund domiciles and their service providers.

Mauritius ranks 12th on the Index of Economic Freedom 2010

Mauritius is placed 12th in global rankings of the Index of Economic Freedom 2010 published by the Wall Street Journal and the Heritage Foundation, which rate the freedoms of 183 economies across the world on a scale from 1 to 100 points.

With a total economic freedom score of 76.3 points, Mauritius ranks 1st out of the 46 countries in the Sub-Saharan African region followed by Botswana with 70.3 points, Madagascar with 63.2 points and South Africa with 62.8 points. Mauritius' overall score is by two points better than that recorded in 2009, which reflects major improvements in freedom from corruption and labour freedom.

The 2010 Index states that despite the global economic turmoil, Mauritius's economy has shown a considerable degree of resilience, and an environment conducive to dynamic entrepreneurial activity which has contributed to its economic freedom. According to the report, the country's institutional advantages are noticeable with a transparent and well-defined investment code and legal system which have made the foreign investment climate in Mauritius one of the best in the region.

The Index adds that taxation is competitive and efficient in Mauritius with an economy which is becoming increasingly diversified, with significant private-sector activity in sugar, tourism, economic processing zones, and financial services, particularly in offshore enterprises. Mauritius is also seen as having improved its management of public spending and having a judiciary “independent of politics and relatively free of corruption” providing strong protection of property rights. Reforms have also made the investment procedures significantly easier for people to do business and at the same enabled firms to withstand the global recession with less difficulty.

Index of Economic Freedom rates economies based on ten economic freedoms within 10 specific categories. They are namely labour freedom, business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights and freedom from corruption.

Mauritius : BOI Investment Mission to India

The Vice-Prime Minister, Minister of Finance and Economic Empowerment, Dr Rama Sithanen, led an investment mission from 16 to 22 January to New Delhi and Mumbai in India. The delegation comprised the Chief Executive Officer of the Financial Services Commission of Mauritius, the Managing Director of the Board of Investment (BOI) and senior executives of the BOI.

The objectives of the mission, which was organised by the BOI, were to position Mauritius as a services platform and promote investment opportunities in addition to reinforcing the image of Mauritius as a reputable and attractive financial services centre with modern legal and regulatory framework for global business.

The mission aimed at increasing awareness of opportunities in Mauritius as a financial platform to African countries for outbound investments and particularly encouraged Indian financial intermediaries to set up in Mauritius to service international clients seeking to invest in India as well as Indian clients seeking business opportunities.

The seven-day mission which was effected with a view to enhancing the visibility of Mauritius on the Indian market focused mainly on several meetings with the business community and officials from the government of India, in order to position Mauritius as a competitive services platform.

Networking events including plenary sessions bringing together the players in the financial sector were also held. A series of investor roundtable were organised in several sectors namely, information and communication technology and business process outsourcing, hospitality and real estate and pharma and healthcare.

Labuan IBFC : Evolution in Tax Planning - From secrecy to openness

Islamic Finance Pauses for Breath in 2009 as London Retains Position as Key Western Centre

• Global Islamic finance market pause in 2009 following further big rise in 2008
• Islamic banks exposed to falling real estate market and to liquidity constraints
• Sukuk market recovery in 2009 but tested by defaults
• UK remains leading Western provider ranked eighth globally

The global market for Islamic financial services is estimated to have risen by 25% to reach $951 billion by end-2008. The Islamic Finance report from International Financial Services London (IFSL), the independent organisation promoting financial services throughout the world, notes that the Islamic finance sector is feeling the influence of the downturn in the global economy with asset growth likely to have paused for breath in 2009.

Parts of Islamic finance face particular challenges: some Islamic banks are exposed to the downturn due to the falling real estate market and to liquidity constraints. The sukuk market, despite a 30% recovery in issuance from a low of $15 billion in 2008 to $20 billion in 2009, is being tested by its ability to deal with several defaults. A $10 billion loan by Abu Dhabi staved off the threat of a potential default by Dubai World on its repayment on the Nakheel $4 billion sukuk in December. Quality sukuk issuers continue to attract demand from investors.

Reflecting the economic downturn, there was less activity in London in 2009: with two Sukuk listings on the London Stock Exchange following three in 2008 and 12 in 2007. There were three fund launches in 2009 compared with six the previous year. No further licences to sharia compliant banks were sought to add to the five established since 2004, and the one independent takaful operator in the UK ceased to take new business in 2009.

IFSL’s report indicates, however, that the UK’s position as the key Western hub for Islamic Finance remains strong. London’s total of 22 banks offering Islamic finance products, is greater than that of any other Western country. This is buttressed by the UK’s uniquely strong infrastructure of professional support for Islamic finance deals and transactions, including twenty major law firms and the Big Four accounting firms. This has yet to be seriously rivalled, although both Paris and Frankfurt are gradually developing capabilities. The LSE’s 20 sukuk listings worth $11bn is second only to Dubai.

Duncan McKenzie, IFSL’s Director of Economics said “The UK is the only western country to feature prominently in provision of Islamic finance and remains in eighth position with assets of $19 billion in a global ranking of sharia compliant assets by country.”

Click here to view PDF of Islamic Finance 2010 report

International Guide to Hedge Fund Regulation

ISBN 9781847663603
Publication Date: Dec 09
Format: Hardback
List price: £195

General Editors: Ian Mason, Barlow Lyde & Gilbert and Martin Cornish, Katten Muchin Rosenman Cornish, LLP

International Guide to Hedge Fund Regulation is a brand new book providing the latest guidance on the regulation of hedge funds and hedge fund managers in a comprehensive 20 jurisdictions.

It covers all legal and regulatory considerations and lays out how a fund and its manager must operate in order not to fall foul of a full 20 regimes around the world.

Written by local experts in these 20 countries, International Guide to Hedge Fund Regulation cuts through the complexities of setting up and administering a hedge fund and a hedge fund manager, providing a detailed breakdown of the regulatory issues surrounding:

Authorisation

Establishment and initial set-up

Supervision and regulatory issues

Voluntary codes

Tax efficiency

Enforcement

Marketing

International Guide to Hedge Fund Regulation is up to date with the latest developments, including:

The G20’s intention to increase offshore regulation and information provision requirements

The EU’s draft Directive on Alternative Investment Fund Managers (AIFM), scheduled to come into force in 2011

The UK chapter of International Guide to Hedge Fund Regulation benefits from being co-written by a former FSA Enforcement Head, providing an insider’s view of a system he helped to shape; and a leading hedge fund lawyer with over 20 years of practical experience in setting up hedge funds and hedge fund managers.

With a topical analysis of the current state of the industry, including the direction in which regulation is moving as a consequence of the global financial crisis, this is an essential title for all financial law practitioners, compliance officers and in-house counsel.

Contents
• Preface • Contributors’ Page • Introduction – Forthcoming Issues • Australia • Bermuda • British Virgin Islands • Cayman Islands • France • Germany • Guernsey • Ireland • Hong Kong • Isle of Man • Jersey • Luxembourg • Malta • Mauritius • Netherlands • Singapore • South Africa • Switzerland • UK • USA

Allen & Overy netalytics

netalytics is an online legal risk management resource covering the validity and enforceability of the early termination and close-out netting provisions of the ISDA Master Agreements. Developed by Derivative Services LLP (an affiliate of Allen & Overy) as a joint venture with the International Swaps and Derivatives Association ("ISDA"), netalytics is available to ISDA members who subscribe.

netalytics looks at 14 key issues (colour-coded adopting a "traffic light system") standardised across more than 45 jurisdictions to help decide whether a transaction with a particular counterparty is eligible for close-out netting. netalytics also enables users to conduct cross-jurisdictional comparative analyses so that answers to one or more of the key issues can be compared across multiple jurisdictions. In addition, netalytics contains all the ISDA netting opinions as well as relevant netting legislation.

Benefits:

• Helps to ensure that a consistent approach to netting across jurisdictions is adopted, reducing credit and legal risk
• Saves time and money spent on outside counsel or on in-house resources previously devoted to netting analysis
• Is available to all subscriber offices, regardless of time or location
• Reduces credit risk and consequently allows more effective allocation of capital
• Easy and intuitive to use website

IOSCO completes global framework to fight against cross-border market abuse

The International Organization of Securities Commissions (IOSCO) has announced that it has achieved its goal, set in 2005, of having its eligible membership sign onto or committed to sign the Multilateral Memorandum of Understanding concerning Consultation, Cooperation and the Exchange of Information (MMoU).

The goal was achieved at the last meeting of the Chairs of the Executive, Technical and Emerging Markets Committees, at the conclusion of which the Conseil du Marché Financier of Tunisia was invited to become the latest full signatory to Appendix A of the MMoU. From IOSCO’s eligible membership of 115 securities regulators, 96% now meet the requirements needed to become signatories to the MMoU, or have made the necessary commitment to seeking national legislative changes to allow them to do so in the near future.

The 64 full MMoU signatories can now request and share confidential information in the pursuit of cross-border securities offences. IOSCO’s rigorous expert assessments found that these jurisdictions are fully compliant with the cooperation and enforcement requirements of the MMoU.

The majority of the remaining eligible IOSCO members, a further 46, have indicated their commitment to seeking the changes necessary to become signatories. A small number of members have yet to formally enter the process and are likely to receive technical assistance to help them meet the minimum requirements.

Jane Diplock, Chairman of IOSCO’s Executive Committee, said:

“I am delighted that IOSCO has achieved its goal within its self-imposed January 2010 deadline. The MMoU is now the acknowledged standard for securities enforcement cooperation and represents an impressive achievement for IOSCO, but also an outstanding example of the commitment from its members to protecting the integrity of global capital markets and investors from the risk posed by cross-border market misconduct.

“The MMoU is a unique example of an international regulatory standard implemented across the globe, and IOSCO’s members’ continuing commitment to cooperation and information exchange is a concrete example of securities regulators support for the G-20s’ aim of promoting information sharing and the development of international standards with respect to bank secrecy and transparency.”

Kathleen Casey, Chairman of IOSCO’s Technical Committee, said:

“The MMoU provides IOSCO members with a unique instrument to enhance the level of their cooperation and information exchange to combat cross-border securities violations, and improve their ability to enforce securities regulation worldwide.”

Guillermo Larrain, Chairman of IOSCO’s Emerging Markets Committee, said:

“The MMoU will deliver significant benefits to emerging markets members as their enforcement activities become stronger and national markets are made more attractive to investors.”

Multilateral Memorandum of Understanding

The MMoU has been instrumental in a number of recent enforcement cases in various jurisdictions and 2008 saw 867 information requests made by IOSCO members to fellow regulators. This is an increase of 18% from 736 requests made in 2007 and almost double the 384 requests made in 2005 when IOSCO decided to require all members to sign the MMoU.

The MMoU was developed following the events of 11 September 2001, when IOSCO created a Special Project Team to explore actions that securities regulators could take to expand cooperation and information sharing. Subsequently at its 2005 Annual Conference, in Colombo, Sri Lanka, IOSCO’s Presidents Committee, representing all members, decided that all ordinary members and associate members with primary responsibility for securities regulation in their jurisdictions should have applied for and been accepted as signatories under Appendix A of the MMoU or have expressed, via Appendix B, a commitment to seek legal authority to enable them to become signatories. In order to achieve these objectives, IOSCO has been providing resources to members, including technical assistance, so that the 2010 target could be met.

The MMOU provides a mechanism through which securities regulators share with each other essential investigative material, such as beneficial ownership information, and securities and derivatives transaction records, including bank and brokerage records. It sets out specific requirements for the exchange of information, ensuring that no domestic banking secrecy, blocking laws or regulations prevent the provision of securities enforcement information amongst securities regulators.

AAOIFI Publishes New Standards

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the international standard-setting organisation for Islamic finance, has published its new standards publications entitled Shari’a Standards 2010 and Accounting, Auditing, and Governance Standards 2010.

The Shari’a Standards 2010 publication contains a total of 41 Shari’a standards including 11 new standards which are on stipulations for gharar (uncertainty) in financial transactions, arbitration, waqf (endowment), ijarah (leasing) on Labour, zakah (alms), contingent obligations, credit facilities, online financial transactions, rahn (pledge), investment accounts and profit distribution, and Islamic reinsurance. The new publication was made possible by the support from Alimtiaz Investment of Kuwait and Barwa Bank of Qatar.

Dr Mohamad Nedal Alchaar, Secretary General of AAOIFI, said that the standards have helped Islamic financial institutions throughout the world to ensure that the products and services they offered complied with Shari’a. He also added, “the standards have also managed to introduce a high degree of harmonisation of Islamic finance practices across the major Islamic finance markets and consequently place the industry in a stronger position to expand”.

Meanwhile, AAOIFI’s Accounting, Auditing and Governance Standards 2010 publication contains a total of 40 standards covering the areas of accounting, auditing, ethics, and governance for Islamic financial institutions. Among the new standards included in the publication are accounting standard on investments in associates, statement of governance principles, and governance standard on corporate social responsibility.

Development of AAOIFI’s standards was undertaken by its Shari’a Board – acknowledged as the leading global authority on Shari’a for international Islamic finance – and Accounting and Auditing Standards Board.

FSA Chairman calls for close engagement between accounting standard setters and prudential regulators of banks

FSA chairman, Lord Turner, today called for close engagement between global accounting standard setters and those responsible for prudential regulation of the banking sector to address issues arising from the unique systemic nature of banks.

Financial Services Authority (FSA) chairman, Lord Turner, today called for close engagement between global accounting standard setters and those responsible for prudential regulation of the banking sector to address issues arising from the unique systemic nature of banks.

Speaking today at a conference hosted by the Institute of Chartered Accountants of England and Wales (ICAEW) in London, Adair Turner, said: “No other sector of the economy is remotely comparable to banking in its capacity to be a driver of economic volatility rather than a victim of it.” As a result, he argued that banks must be viewed differently from any other sector of the economy, including the rest of the financial sector, and that accounting standards relevant to banks need to reflect these differences.

He highlighted two aspects of existing bank accounting practice which contribute to the problem of procyclicality and are, therefore, intrinsically tied to macro-prudential and macroeconomic concerns:

• First, the accounting treatment of loan losses within the banking book. This bases loan loss provisions on evidence of already current credit impairment and does not allow for reasonable judgements on future potential losses.
• And second, the ‘fair value’ valuation approach (predominantly ‘mark-to-market’) in the trading book, which recognises unrealised gains or losses and which, especially when applied to illiquid securities, can drive harmful volatility in both upswings and downswings.

In respect to the first, Adair Turner welcomed the increasing dialogue between the International Accounting Standards Board (IASB) and prudential regulators, and highlighted in particular the IASB’s consultation on a new version of IAS39, which would require loans on balance sheet to bear an ‘economic loss’ provision, rather than recognising losses solely according to the existing incurred loss approach. Adair Turner commented: “In principle this approach has merit, but the devil is very much in the detail and, in particular, in the detail of how ‘economic loss’ will be calculated.”

If calculation of economic loss referred to current market expectations of future losses, there is a danger this becomes mark-to-market by another name, creating even greater procyclicality than in the past.

In respect to the trading book, Adair Turner recognised that there is no alternative to mark-to-market accounting for some instruments, that there is information which shareholders should logically value in mark-to-market accounts, and there is a danger in allowing the freedom to switch accounting approaches to hide problems. Conversely, however, too widespread an application of mark-to-market accounting can exacerbate system volatility.

FSA recommendations:

Faced with these complex considerations, the FSA’s preference would be:

• first, to allow the banking book to reflect a more forward looking approach to loan losses; and
• second, to limit the use of fair value accounting in the income statement to the areas of the trading book where it is most appropriate and, in particular, to trading activities in markets likely to remain highly liquid in nearly all circumstances.

Banking book:

Ideally, the FSA has argued for two separate lines of account information on loan loss provisions: the existing line, as now, and a separate line based either on a formula, as in Spain, or on the judgements of management, challenged by regulators, and with the details, basis and rationale for that judgement extensively disclosed. If this ideal approach is not followed, careful disclosure of the judgements made in the development of the single ‘economic loss’ line will be essential.

Trading book:

In parallel with the regulatory agenda focused on higher capital requirements against trading books, there should be consideration of the appropriate criteria for inclusion of assets within trading books for accounting purposes. In general, this should ensure that the trading book fair value approach is only applied where instruments are liquidly traded and likely to be liquidly tradable in almost all conceivable circumstances.

Adair Turner concluded: “Banks are different because they matter more, because they can do more harm. That’s why we regulate and supervise their businesses but don’t regulate the businesses of retailers or hoteliers or manufacturers. That’s why there is a special relationship with central banks as lender of last resort. That’s why we worry a lot about banks which are too-big-to-fail.

“And that’s why prudential regulators, central banks and economic policymakers have a vital interest in the decisions of accounting standard setters in relation to bank accounting standards, which does not apply between regulators and accounting bodies in any other sector of the economy.”

The full speech

IMA welcomes Draft Regulations to remove tax on investments by UK Funds in certain Offshore Funds

20% tax to be removed from investments by UK Authorised Funds in non-reporting offshore funds - levelling UK fund treatment with offshore funds.

The Treasury has issued draft regulations that will change the tax treatment of investments by UK Authorised Funds in non-reporting offshore funds ("NROFs") with effect from March 2010. NROFs are funds that do not distribute or report their income to investors. The new rules will effectively remove the 20% tax that at present "sticks" in the UK fund and will result in different types of investors having a tax outcome that is much closer to the position if they invest directly in NROFs or via another offshore fund.

Responding to the proposals, Julie Patterson, Director of Tax and Authorised Funds said:

"These proposals are another step forward in helping the UK funds industry to compete on level terms with the offshore industry.

At present, many types of UK investors are disadvantaged if they invest in UK funds that invest in non-reporting offshore funds, compared with investing in such non-reporting offshore funds direct or via an offshore fund of funds. We therefore welcome these proposals, which have been drawn up in the context of the FSA's consideration of ‘Funds of Alternative Investment Funds', but which will apply to all authorised funds.

We also welcome the Government's statement that it will continue to work with industry and will consider further development of the regulations following their initial introduction."

At present, when a UK fund disposes of its investments in NROFs, the UK fund suffers corporation tax of 20% on the entire gain, which is called an "Offshore Income Gain". Furthermore, when individual investors dispose of their shares/units of that UK fund, the investors may have to pay a further 18% in capital gains tax. Overall, this leaves some investors in a worse position than if they had invested directly in NROFs, and others in a more favourable position. In particular, exempt investors (such as pension funds, charities, and CTF, ISA and SIPP investors) cannot reclaim the 20% tax suffered by the fund itself. Consequently, there is currently very little investment by UK funds in NROFs, and any fund wishing to invest in such vehicles would need to be set up offshore.

The draft rules can be viewed here

FTSE Group and EDHEC-Risk Institute collaborate to create innovative benchmarking with new risk efficient indices

FTSE Group (FTSE), the award winning global index provider and EDHEC-Risk Institute, the leading centre for applied asset and risk management research, have today launched the FTSE EDHEC-Risk Efficient Indices, an index series which uses a risk-adjusted strategy to that of traditional market capitalisation-weighted indices, to deliver investors with an optimal risk : return ratio.

The FTSE EDHEC-Risk Efficient Index Series, a global offering, can be used by asset owners and investment consultants to capture equity market returns with improved risk/reward efficiency. This efficiency is achieved by maximising what is known as the Sharpe ratio, by weighting the constituents of the indices accordingly. This enhanced methodology, combined with a constituent base deriving from the renowned FTSE All World Index Series, allows investors to develop new passive investment strategies, an area that is consistently growing amidst the global recovery. These indices serve a different purpose to traditional market capitalisation-weighted indices which are created to track the performance of the market, using an advanced methodology to achieve efficient risk to return.

Professor Noël Amenc, Director of EDHEC-Risk Institute, said: Overall, traditional commercial capitalisation-weighted indices are not designed to be at the pinnacle of efficiency or provide well-diversified portfolios, as they principally track the market. EDHEC-Risk Institute has therefore undertaken major research in a methodology that minimises excessive concentration of risk and affords investors the ability to benefit from the maximum Sharpe ratio portfolio. This simple concept is primarily based on the concept of a positive and robust long-term relationship between the risk of a stock and its return and we are pleased to have partnered with FTSE Group, an authority in the field of indexing, to achieve this within an innovative index series.

Mark Makepeace, Chief Executive FTSE Group said: Increasingly, investors are looking to diversify their core passive funds across a range of benchmarks weighted by market cap and other weighting schemes. The weighting methodology developed by the EDHEC-Risk Institute provides a robust and transparent approach to constructing a benchmark seeking to achieve an efficient risk return.

UK could lose tax millions as Swiss entice hedge funds

UK could lose tax millions as Swiss entice hedge funds

The Government could lose hundreds of millions of pounds in revenue as the result of a Swiss campaign to lure hedge fund executives away from London with a promise to halve their tax bills.

Australia : Government Welcomes Johnson Report on Australia as a Financial Services Centre

The Government welcomes the Australian Financial Centre Forum's report on Australia as a Financial Centre (the Johnson Report).

The Government commissioned the report in September 2008, as part of its commitment to secure Australia's future as a leading financial services centre.

"Australia, as an open, well regulated and stable economy in the region, is uniquely placed to capitalise on its comparative advantages and to benefit from opportunities to grow Australia's financial services sector," Mr Bowen said.

The report concludes that Australia has arguably the most efficient and competitive financial sector in the Asia-Pacific region, but that there are opportunities to expand our exports and imports of financial services and hence maximise the benefits flowing to the Australian workforce and Australian consumers of financial products.

"The Rudd Government has already taken a range of actions in line with its policy of promoting Australia as a financial services centre," Mr Bowen said.

"We are committed to ensuring that our financial sector is well-placed to make the most of those opportunities that will emerge as the economic recovery takes hold."

Government actions to promote Australia as a financial services hub

Consistent with the Johnson Report's views on the importance of a more vibrant corporate bond market, ASIC has released a discussion paper on measures aimed at facilitation of offers of corporate bonds.

The Government has announced that it will provide for ASIC to perform supervision of real-time trading on Australia's domestic licensed markets – a measure that will allow for consideration of whether there should be increased competition on exchange traded markets consistent with the Johnson Report.

From 1 July 2009, the withholding tax rate on certain distributions of income to non-residents by Australian managed funds was reduced to 15 per cent.

"From July 1 this year the withholding tax rate on those distributions will be cut further to 7.5 per cent – one of the lowest rates in the world," the Assistant Treasurer said.

"The Government has also released for public consultation draft legislation that will repeal the Foreign Investment Fund and Deemed Present Entitlement rules," the Assistant Treasurer said.

"A considerable amount of consultation went into the preparation of the report. The Government will now consider the final recommendations of the Johnson Report before responding later in the year," Mr Bowen said.

"I would like to thank Mark Johnson, the Panel of Experts, the Secretariat and the financial services industry groups for their valuable assistance."

Copies of the Report are available at www.treasury.gov.au/afcf/content/final_report.asp

Eversheds Pilots South African Joint Venture to Support Growth Plans

International law firm Eversheds today announced that it is to pilot an innovative joint venture with its South African office to provide outsourced legal services to clients. The six month pilot will see a range of basic scope and commoditised legal work for the firms international client accounts completed in South Africa.

Commenting on the move, Bryan Hughes, Eversheds chief executive said:

"The legal sector is in the eye of a perfect storm - we have been subjected to the most difficult trading conditions that any of us have ever faced leading to huge downward pressure on pricing. These pressures are only going to be compounded by anticipated deregulation in the wake of the Clementi reforms and our research tells us that fee levels are not going to return to those generated in previous years. Consequently, those firms that are going to survive, let alone thrive, are those that face up to the reality of the seismic change facing our sector and transform the manner in which legal services are delivered.

"We see the market pressures and regulatory changes as offering a progressive firm like ours, huge opportunities for the future. The price and budgetary squeeze resulting from the credit crunch has opened up considerable opportunities for Eversheds to take more strategic legal work from our competitors, one of our stated strategic objectives. However at the same time, we have the skill set to protect and expand the increasing demand for commoditised services, such as contract review and enforcement actions. The biggest complaint from general counsel is that law firms will not embrace change. That's not Eversheds' ethos."

The setting up of the joint venture in South Africa is an extension of the firms 'networked law' approach in the UK which longstanding clients of the firm are already familiar with. Eversheds uses its network of offices to move work from higher cost centres to lower cost centres giving clients the benefit of a high quality service but delivered cost effectively.

"If your strategy to deal with market forces is simply to reduce prices, that strategy is unsustainable, pressure on the margins will inevitably lead to a decline in quality." says Graham Richardson, head of the firms Legal Systems Group who is leading the South African joint venture project. "That's not what we're about as a firm.

"For many years, we have been looking at ways of delivering traditional legal work in innovative ways, delivering to the perennial client challenge of producing a quality offering for less. We have thought long and hard about our strategy to address the rapid changes in the market place and have a number of options in place. Some clients work with our dedicated business process re-engineering team to analyse and improve delivery methods in order to reduce costs and increase efficiency and quality, both within Eversheds and within the client's own operation. Whilst historically most law firms decided to off load or re-brand their volume operations, we made the strategic decision to retain ours, which gives us a unique skill set in process and systems management giving us substantial experience of commoditising and breaking down legal work in to a process, thereby ensuring work is done faster, better and more cost-effectively. We also have the additional option to offshore work to third parties such as Williams Lea delivering the solution that best fits the clients need. Our client base is increasingly global and our clients are unconcerned as to whether the work is done in South Africa, Birmingham or India, as long as it's done cost-effectively and efficiently, and the quality is guaranteed by the Eversheds brand ."

Eversheds has a full-time innovation group, led by Graham Richardson, which is responsible for driving innovation across the firms practice areas and finding new ways of delivering legal services to provide clients with increased value. Two of the product lines that the group is currently looking at include, large scale diligence and volume planning agreements. The group also has a remit to develop new products and to find new ways to deliver work in areas which the firm had either previously been priced out of or been taken in-house.

"Staying focussed on what the client wants is also about staying ahead of the market" says Bryan Hughes. "Finding innovative ways of delivering legal work will provide our people with challenging and sustainable work of increasing complexity whilst allowing us to defend our position from new entrants in to the market. Law is our business, we know it inside out. We know how to deliver quality and value better than anyone".

"The fact that the legal world is changing is a hard message for many in the sector to hear. The modern law firm today looks drastically different from the law firm of two, let alone ten years ago. As a firm, over the last eighteen months we have made a series of changes by way of response to the revolution taking place in the industry, but we know by talking to our clients, that lasting change in the profession is here to stay and the need to adapt and change will be a constant refrain. Our South African joint venture pilot is just one of the strategies that we are deploying in order to maintain our competitive advantage."

Walkers : Industry Experts Predict Greater Market Discipline and More Due Diligence in 2010

Joel Press, Managing Director of Morgan Stanley’s Prime Brokerage Division; Todd Groome, non-Executive Chairman of the Alternative Investment Management Association (AIMA); and Gregory Zuckerman, author and special writer with The Wall Street Journal were among the experts who offered their predictions for 2010 at a seminar for more than 300 members of the financial industry in New York hosted by international offshore law firm Walkers. The experts' predictions included greater market discipline from investors and an increased focus on due diligence by providers and custodians. Greater allocations to hedge funds were anticipated at the expense of equities, while the latest regulatory waves and the next likely bubbles in the market were also debated.

"In today’s environment, there can no longer simply be a checklist to confirm a process. Potential investors must look at what motivates and drives the relevant provider," said Ingrid Pierce, Partner with Walkers and head of the firm's Cayman Islands Hedge Fund practice. "Custody diligence is very much at the forefront of people’s minds. Key questions include whether counterparties have the ability to move or re-hypothecate assets and whether contracts will hold up in an insolvency."

Investigative diligence, which looks in a very detailed way at precisely what various providers do, not just what they say they do, has also become a key focus as investors and other players ramp up their policies in this area, according to Ms. Pierce.

"It is important for both funds and investors to work out well in advance exactly what their exit strategy will be and how the provisions in the fund's documents will actually work," Ms. Pierce said. "The heightened levels of diligence we have seen throughout the investment process are not going to diminish anytime soon. All participants, including legal counsel have to increase our awareness of the issues and address key areas of risk with our clients."

Highlighting some positive trends in hedge funds, AIMA's Todd Groome pointed to new allocations going to a variety of strategies. For example, managers in Asia are seeing 75% of net new allocations coming from the United States, primarily from pension funds. He also noted the launch of new hedge funds represents a clear increase in confidence.

“Market discipline from investors is back with a vengeance,” said Mr. Groome. “Investors are asking for greater transparency. They want to use the transparency to create a more idiosyncratic contract for their particular situation and a particular strategy.”

On the regulatory front, in this current challenging policy environment, Mr. Groome said things will take time and require considerable coordination among financial leaders, policy makers, and investors.

Joel Press of Morgan Stanley offered his personal insights on what can be expected in the hedge fund market going forward. He anticipates hundreds of smaller start ups in 2010 and said that seeding is more important than ever. With inflows still coming into the market, Mr. Press predicted that the industry will be worth US$3 trillion four years from now, compared to the current estimated value of US$1.8 trillion.

"There is no need for hedge fund fees to go down," Mr. Press said. "If you look at long-term investing, hedge funds are absolutely performing better than any other investment vehicle. Investors are looking to replace equities with hedge fund allocations and hedge funds are increasingly being used as an equity substitute."

The seminar also featured an in-depth examination of the role of fiduciaries, notably issues of responsibilities and accountability, from Guy Locke, Partner and Joint Head of the Corporate and Financial Restructuring Group at Walkers and Scott Lennon, Senior Vice President at Walkers Fund Services.

"It is a brand new world for hedge fund directors. Questionnaires are more extensive and elaborate and people want to know that manuals have been fully tested," Mr. Lennon said. "With changing standards of care and liability caps for auditors and other service providers, managers are in a tough negotiating environment. It is important to understand the whole picture of risk and where it will fall if things go wrong."

Hedge fund financing was addressed by Philip Paschalides, a Walkers Partner and head of the firm's Finance and Corporate Group in the Cayman Islands. Mr. Paschalides said that the banking team in Walkers’ Cayman office had its busiest year ever for hedge fund financing, suggesting that leverage may not be a thing of the past.

"Lenders are generally quite savvy about the hedge fund world," Mr. Paschalides said. "They keep databases, look at redemptions and gates and will lower borrowing bases to account for liquidity and concentration issues."

Gregory Zuckerman from The Wall Street Journal said we are in an age of bubbles, citing housing, energy, Asian currencies and technology stocks as examples of bubbles the market has experienced over the past decade.

"The next bubble may be emerging markets, Brazil, China, or pockets of real estate in Asia or Australia," Mr. Zuckerman said. "Everyone is worried about the next investor. There is an incentive to increasingly pile on trades and now it is much easier to express trades using ETFs, synthetic CDS and other types of derivatives. Managers today are fully invested and talking about adding leverage, but they don't really believe in the long term nature of these investments. It might work out in the short term but long term you wonder if they can all get out."

The New York event was the latest in the 'Walkers Fundamentals' series designed to bring discussions of key financial issues to the world's investment capitals.

"We were delighted to hear attendees use words such as ‘enlightening’ and ‘relevant’ to describe the event," said Mark Lewis, Senior Investment Funds Partner with Walkers, who opened the seminar. “Walkers believes the best way to ensure best practices in the financial community is through open discussion and education by all the participants.”

A progress report on OECD work on tax havens

Media briefing, Tuesday 19 January

Taking forward the G20 Tax Initiative

What: Since the April 2009 G20 London Summit, almost 300 tax agreements have been signed to meet OECD standards on tax transparency and effective exchange of information. All OECD and G20 countries are committed to these standards.

New legislation in major financial centres such as Hong Kong and Singapore enables them to implement the standards as well. Of the more than 40 offshore financial centres identified as tax havens in 2000 all but six now have one or more agreements which meet the standards (see progress report).

The focus of the Global Forum on Transparency and Exchange of Information is now shifting - from commitments and agreements to achieving an effective implementation of the standards.

For more information visit www.oecd.org/tax/evasion

Who: Jeffrey Owens, Head of the OECD’s Tax Centre and Pascal Saint-Amans, Head of the Global Forum Secretariat, will brief journalists on :
• The increase in the number of agreements signed and their quality and relevance.
• The impact on tax compliance around the world
• Next steps, including the timing and outcomes of peer reviews and the role of developing countries in the fight against tax havens.

When: 11h00 on Tuesday 19th January 2010

Where: OECD headquarters, 2 rue André Pascal, Paris 75016.

Journalists outside France can participate, asking questions by calling one of two telephone numbers:

+33 1 5392 3153 or +33 1 7126 3153

To attend the briefing or if you wish to call in, please contact: Helen Fisher, tel: +33-1 45 24 80 97, email: helen.fisher@oecd.org

The briefing will set the background for a series of meetings which will deal with these issues. On 25th January the OECD will launch its Fiscal Initiative for Latin America. On 26th and 27th January the OECD’s Committee on Fiscal Affairs will review progress in the project. On 28th January there will be the Global Forum on Development which will explore how developing countries can benefit from the more transparent environment.

Luxembourg : Finance islamique

Message de SE Luc Frieden, Ministre des Finances

Depuis plusieurs années, le marché de la finance islamique est en constante progression. Les actifs sous gestion conforme aux principes de l’islam seraient aujourd’hui deux fois plus importants en volume qu’il y a cinq ans. En raison de la dimension internationale de la place financière de Luxembourg, le Gouvernement a fait de la finance islamique un élément important de sa politique en faveur de la place financière. Dès avril 2008, un groupe de travail a été mis en place pour mobiliser les différents acteurs privés et publics.

Il est aujourd’hui évident, que le même contexte européen et international qui distingue la place financière du Luxembourg en général répond également parfaitement aux besoins du marché de la finance islamique. Sans surprise, le Luxembourg, premier centre mondial pour les fonds d’investissement à caractère transfrontalier, est également un domicile de prédilection pour les fonds d’investissement islamiques qui ciblent une clientèle internationale. Grâce à son expertise inégalée dans la distribution transfrontalière, le Luxembourg héberge aujourd’hui en effet une quinzaine de fonds d’investissement islamiques distribués à travers l’Europe et le monde entier. Ainsi, le Luxembourg est déjà le 4ème centre mondial dans ce créneau d’activité, derrière la Malaisie, les Emirats Arabes Unis et l’Arabie saoudite.

Démontrant son esprit innovateur et pragmatique, le Luxembourg a été le premier pays européen à autoriser l’établissement d’une compagnie d’assurances répondant aux critères de la charia, les ‘takaful’, en 1983. Pareillement, la toute première bourse européenne à lister une obligation islamique (‘sukuk’) a été la Bourse de Luxembourg. Aujourd’hui encore, la Bourse de Luxembourg compte autant de listings de Sukuk que la Bourse de Londres. En 2009, la Banque centrale du Luxembourg a en outre été acceptée comme premier membre associé européen de l’important régulateur des marchés financiers islamiques, le ‘Islamic Financial Services Board’ en Malaisie.

Soucieux d’intégrer encore davantage la finance islamique dans les secteurs d’activité de la place financière, j’ai demandé récemment aux administrations des contributions d’apporter des précisions relatives au traitement fiscal des principales opérations de la finance islamique. Disposant déjà d’une réelle expertise en la matière, l’Administration des contributions directes vient ainsi de publier une circulaire qui assimile le traitement fiscal des principales opérations de la finance islamique aux opérations comparables de la finance traditionnelle.

Ces précisions témoignent de la volonté du Gouvernement de continuer à développer sans relâche la place financière de Luxembourg comme une place à orientation internationale dans un monde à régions interdépendantes.

STEP : Confidence in Trust & Estate Business Continues To Grow

STEP's latest global quarterly confidence survey shows that member confidence continues to recover strongly from last winters’ lows.

The STEP Near Term Confidence Index, which looks at the outlook over the next three months, has risen a further 10% this quarter, from 20 to 22. This index was -13 at the start of 2009. The STEP Longer Term Confidence Index, which looks at the outlook over the next 12 months, has similarly risen strongly, from 37 to 43, having begun 2009 at -2. The survey looks at members’ views across a wide range of jurisdictions and trust and estate businesses.

The Confidence Indices are constructed by taking the balance of survey respondents replying that they expect business to “improve” or “significantly improve” relative to those expecting business to “decline” or “decline significantly”.

STEP Chief Executive David Harvey said: “This continued rise in member confidence bodes well for the future of the trust and estate industry. It is particularly striking in the context of a broader economic recovery still widely seen as fragile and highlights the strong underlying growth in our sector. The momentum here is also reflected in STEP’s membership figures which rose by more than 10% in 2009 despite the global downturn.”

Findings of the 4th quarter STEP business confidence monitor can be accessed online

Mauritius Hosting “Doing Business 2010 in Africa” Conference

The Government of Mauritius, in collaboration with the World Bank, is organising a three-day conference, from 13 to 15 January, on “Doing Business 2010 in Africa: Sharing Reform Experiences,” at The Grand Mauritian Hotel in Balaclava.

The Prime Minister, Dr Navinchandra Ramgoolam, will, tomorrow morning, proceed with the official opening of the conference which will serve as a platform for participants to discuss doing business reforms, mainly the regulations that either enhance or constrain business activity, with a view to strengthening the capacity of African countries to promote business-friendly reforms, share lessons of experience, and strengthen South-South cooperation.

Delegates from 15 African countries, namely Burkina Faso, Burundi, the Democratic Republic of Congo, Ivory Coast, Kenya, Liberia, Malawi, Rwanda, Senegal, Sierra Leone, Tanzania, Uganda, Zambia, Zimbabwe and Mauritius, as well as Singapore will participate in the meeting.

It will be recalled that in the World Bank group's Doing Business 2010 Report: Reforming Through Difficult Times, released last year, Mauritius ranked 17th in global rankings on Overall Ease of Doing Business 2010 and topped Sub-Saharan economies for the 2nd consecutive year while Rwanda and Liberia figured in the top ten business-friendly reformers worldwide out of the 183 economies rated by the International Finance Corporation and the World Bank.

The World Bank group's Doing Business Reports rate economies across the world based on ten indicators namely, starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

David Kinloch appointed Chief Executive Officer of Labuan IBFC Inc Sdn Bhd

The Labuan Offshore Financial Services Authority (LOFSA) is pleased to announce the appointment of David Kinloch as Chief Executive Officer of Labuan IBFC Inc Sdn Bhd effective from 1 January 2010.

Labuan IBFC Inc is LOFSA’s wholly owned subsidiary entrusted with the promotion and advancement of Labuan International Business and Financial Centre (Labuan IBFC) as a premier international business and financial center.

LOFSA’s Board of Directors has undertaken an extensive international search process over the last 5 months to secure the best candidate for the position.

Kinloch, who had been acting as interim Chief Executive Officer prior to his official appointment today, had in fact been serving as a private advisor to Labuan IBFC Inc Sdn Bhd for more than a year. In this previous role, he was already actively assisting Labuan IBFC Inc in generating awareness especially among international financial intermediaries and corporate end users.

“We have found David Kinloch to be a suitable candidate and believe that he will provide a much more concerted, focused and targeted effort in promoting Labuan IBFC globally,” said LOFSA Director-General Dato’ Azizan Haji Abdul Rahman.

Dato’ Azizan who also sits on the Board of Labuan IBFC Inc. Sdn Bhd went on to say that with Kinloch’s extensive offshore experience in Europe, Asia, Africa and the Middle East, he will be able to assist Labuan IBFC in addressing the unique needs of these markets.

Kinloch, a British citizen, brings with him over 35 years experience in offshore financial services industry, having worked in senior management capacities in leading offshore centers such as Bermuda, Malta, Hong Kong and with many other leading jurisdictions.

His professional history includes assignments with the Virgin Group of Companies United Kingdom, Jardine Matheson in Hong Kong, Lloyds syndicates in London, the Middle Sea Insurance company in Malta and Mobil Oil to name a few.In welcoming Kinloch, the Chairman of Labuan IBFC Inc Sdn Bhd Dato’ Mohammed Azlan Hashim said besides an impeccable global track record, an essential quality for the CEO is a clear understanding of the needs of this specialized market and those of its intermediaries.

“With his experience in the offshore industry, David brings with him a practitioner’s insight which will prove invaluable as we forge ahead with our marketing plan for 2010 and beyond,” said Azlan.

He added that it is essential that Labuan IBFC create a solid bridge to the global offshore industry from which to launch new services and products facilitated via the enactment of the new Labuan Bills by the Malaysian Parliament.

Indeed, Kinloch has a very clear understanding of the country’s unique position within the Asia Pacific region.

“Malaysia is in an ideal position to tap into the burgeoning wealth and economic growth within the region, which will lead to increased cross border transactions via Labuan’s international business centre,” Kinloch said.

Kinloch said that he was pleased to be able to offer his services to LOFSA and the Board of Labuan IBFC Inc Sdn Bhd, especially after having had the privilege of working with both parties prior to his appointment as Chief Executive Officer.

“Having been a part of this promotional agency from a very early stage has given me an opportunity to witness its growth, providing me a clear vision from which to launch its next phase of development,” Kinloch went on to say.

About Labuan IBFC

Labuan International Business and Financial Centre (Labuan IBFC) offers global investors and financial service providers all the benefits of being in a leading offshore financial centre, plus access to Malaysia’s network of double-taxation treaties with 69 countries.

As an integrated financial services centre, Labuan IBFC is increasingly becoming a jurisdiction of choice for investment holding companies, and offers a wide range of products such as captive insurance, trusts, fund management, leasing, estate planning and wealth management.

Investors can enjoy the benefits of Labuan’s cost-efficient and market friendly business environment, supported by professional services in tax, trust and law.

This international financial services centre, off the coast of Sabah, Malaysia is also as a hub for Islamic Finance, especially in areas of Sukuk issuance and listing, takaful and re-tafakul, syariah-compliant captive structures and Islamic trusts and foundations.

About Labuan IBFC Incorporated Sdn Bhd

Labuan IBFC Inc Sdn Bhd is the official agency established to promote Labuan International Business and Financial Centre as the premier international business and financial centre in Asia Pacific.

Labuan IBFC Inc is a wholly owned subsidiary of the Labuan Offshore Financial Services Authority which is the supervisory authority of Labuan IBFC, established under the Labuan Offshore Financial Services Authority Act 1996.

World's Largest Offshore Law Firm Appleby Drives Expansion With New Office in Guernsey

Appleby, the world’s largest offshore legal, fiduciary and administration service provider, has announced the planned opening of its latest office in Guernsey, Channel Islands. The new office will be operational in the Spring of 2010 and will practise Guernsey law with a focus on corporate, commercial, private client, litigation, insolvency and restructuring and following approval by the Guernsey Financial Services Commission, a complete range of fiduciary services.

The move will support Appleby’s strategy to offer clients the widest choice of sophisticated financial centres through which to invest, and establishes the firm’s position as the only offshore legal, fiduciary and administration service provider with a major foothold in eight of the world’s leading offshore business centres.

Appleby Guernsey will initially comprise two Group Partners, Barney Lee and Helen Crossley, in the Corporate team and two Partners, Jeremy Le Tissier and Gavin Ferguson, in the Litigation/Insolvency and Private Client/Trust teams. They will all join the Appleby Group from a leading Channel Islands law firm. In addition, David Clark, a Banking partner in Appleby’s London office, will relocate to Guernsey to lead the new office. On the fiduciary side, Chris Ward will join the firm to lead the Fiduciary and Administration Services business having previously served as Managing Director of Rothschild Trust, Guernsey.

Following the establishment of Appleby Guernsey, the firm will have 12 offices worldwide in the key offshore centres of Bermuda, the British Virgin Islands, Cayman Islands, Isle of Man, Jersey, Mauritius, Seychelles and Guernsey, as well as the leading financial centres of London, Hong Kong, Zurich and Bahrain. The move follows the firm’s successful launch in the Isle of Man, through its merger with Dickinson Cruickshank, and new office openings in the Seychelles, Bahrain and Zurich in 2009, taking Appleby to 79 partners and over 210 lawyers, and a total of over 800 staff.

Michael O’Connell, Managing Partner of the Jersey office added: “We are very excited about this development. Our entry into the Guernsey market will offer our corporate, institutional and private clients with greater resources and a broader range of structures and jurisdictions, unmatched by any other offshore law firm. We believe that this move will solidify Appleby’s position as the first choice for clients in the offshore sector.”

KBTS launches Russell Bedford Mauritius audit practice

Kross Border Trust Services Limited (KBTS), the Russell Bedford accounting group's Mauritian member, has expanded its operations with the launch of Russell Bedford Mauritius as its associated audit practice.

In addition to statutory audit, Russell Bedford Mauritius will also provide accounting, outsourcing, tax investigation, tax planning, tax compliance, internal audit, enterprise risk management, risk evaluation, strategic planning and treasury management services.

The audit practice's client base includes domestic and offshore companies from different sectors such as retail, manufacturing and trade.

At its launch, Russell Bedford Mauritius has two partners.

Neeshal Jingree is the audit and tax partner. He has more than seven years of audit and tax experience with a Big-4 firm. He is a fellow member of the Association of Chartered Certified Accountants. He holds a degree in Commerce from the University of Mumbai, India and an honours degree in Applied Accounting from Oxford Brookes University, UK.

Yasheel Jingree is the consulting partner in the firm. He also previously worked for a Big-4 firm. He holds an accounting degree from Middlesex University and also has an MBA from Liverpool John Moores University, UK.

ACA training in Mauritius

The Associate of the Institute of Chartered Accountants in England and Wales (ACA) is widely regarded as a premium qualification in Mauritius. Exams for the full ACA programme are now available on the island. Classes are planned for Spring 2010.

Minimum entry requirements

The majority of students joining the ACA programme are graduates. However, if you are a school leaver with the equivalent of 220 UCAS points or more, you are eligible to study the ACA.

Credit for prior learning (exemptions)

Members of other accounting institutes may gain credits for a number of modules. You may also be awarded credit based on your degree.

Tuition

Classes in Mauritius are currently under development and are planned for Spring 2010.

Exams

All ICAEW exams are held in Mauritius.

Knowledge Modules

The e-assessment Knowledge Modules are held at the University of Mauritius, Réduit.

Application and Advanced Stage Modules

Exams are held at the Mauritius Examinations Syndicate in Réduit.

Review of the Differentiated Nature and Scope of Financial Regulation - Key Issues and Recommendations

The Joint Forum today released its report Review of the Differentiated Nature and Scope of Financial Regulation - Key Issues and Recommendations. This review was requested by the G20 through the Financial Stability Board. The report analyses key issues arising from the differentiated nature of financial regulation in the international banking, securities, and insurance sectors. It also addresses gaps arising from the scope of regulation as it relates to different financial activities, with a particular focus on certain unregulated or lightly regulated entities or activities. The objectives of the review were to identify potential areas where systemic risks may not be fully captured in the current regulatory framework and to make recommendations on needed improvements to strengthen regulation of the financial system.

The report's recommendations address five specific areas:

• Issues arising from regulatory differences across the three sectors, including with respect to similar financial products;
• Supervision and regulation of financial groups, focusing on unregulated entities within those groups;
• Residential mortgage origination, focusing on minimum underwriting standards consistently implemented by different types of mortgage providers;
• Hedge funds, especially those that present systemic risk; and
• Credit risk transfer, focusing on credit default swaps and financial guarantee insurance.

John C Dugan, Chair of the Joint Forum until the end of 2009 and Comptroller of the Currency in the United States, said today: "This paper takes a focused look at certain regulatory gaps that became apparent during the crisis. There are some key recommendations in this report that, once implemented, will reduce those gaps and strengthen regulation of the financial system. Consistency in regulation and similar supervision for similar activities are key principles for effective oversight of systemic risks. This report sets the stage for additional important work that will lead to greater convergence of the supervision of financial activities and firms."

UK : New British licence requirements for overseas online gambling firms

Sports Minister Gerry Sutcliffe today announced proposals to bring in new licence requirements for overseas-based online gambling firms who want to have a customer base in Britain.

The plans, which will be subject to a consultation period, would mean that online operators currently licensed outside Britain will have to apply for a licence from the Gambling Commission if they want to advertise or provide their gambling services to British consumers.

Under the plans, all online gambling firms active in the British market will have an obligation to share information about suspicious betting patterns with the UK’s sports governing bodies as well as the Gambling Commission. They will also have to comply with British licence requirements including the protection of children and vulnerable people, and will have to demonstrate how they will contribute to the research, education and treatment of problem gambling in Britain.

The Government is considering what the plans mean for operators based in countries outside Europe – specifically in terms of the Government’s approved ‘whitelist’ of countries whose operators are able to advertise in the UK. The Government intends to keep the ‘whitelist’ in some form and it will remain a fundamental part of any future regulatory system. Proposals for any changes to the system will be included in the consultation.

Today’s plans have been announced following a review of the system of online gambling regulation in Great Britain, focusing on consumer protection and ways to ensure that overseas operators contribute towards regulation, problem gambling treatment and the Horserace Betting Levy. The review has looked in some detail at the way the system currently works, as well as exploring the significant regulatory changes taking place in Europe and beyond.

The Government is still investigating ways to secure fair contributions from overseas operators to the Horserace Betting Levy.

Minister for Sport Gerry Sutcliffe said:

“Online gambling has changed significantly in recent years with many European countries taking new approaches to regulation. It would be wrong of us to stand still where things are changing around us - especially where the protection of British consumers may be at stake.

“The new system outlined today will also ensure that all businesses offering online gambling to our consumers adhere to our rules – not someone else’s. The Gambling Act is already one of the best regulatory frameworks in the world and these changes will ensure that it sets the standard for all online gambling companies that target British consumers.

“This is also about making sure overseas firms contribute their fair share towards regulatory costs and vital services like problem gambling treatment.

“In terms of the Horserace Betting Levy, I remain firmly of the view that all operators taking bets on British races should pay their fair share. There is more to do but I am committed to making sure this happens.”

The future of the Global Fund Domiciles

IFI's seminar, the Future of the Global Fund Domiciles, will take place on 14th January in London. Anyone wishing to attend will need to register by 8th January.

Subjects to be covered at the event include: the political challenges to the fund domiciles; fund industry relocation; and various panel sessions on the future of the EU and offshore jurisdictions.

Click here for more information

Expansion seen for global outsourcing market

Outsourcing providers around the world predict that demand for their services is expanding rapidly, and they are adding staff and investing in new services to meet expected growth, according to a new survey from Duke University's Offshoring Research Network and PricewaterhouseCoopers.

The survey of 514 outsourcing service providers in 50 countries found that the industry is transforming due to the emergence of new providers around the world and efforts of existing outsourcers to expand into new markets. Outsourcing companies in North America and India, which have long dominated the industry, are being challenged by competition from Latin America, Eastern Europe, and Asia, in service areas such as contact centers, business process outsourcing, and information technology outsourcing.

According to the survey, a large number of service providers expect to begin new software development and IT service contracts in the next 18 to 36 months. The number of service providers planning to offer new finance and accounting, human resources, and innovation services more than doubled from the previous year. Overall, 62% of service providers said they plan to expand the scale of their existing offerings.

"Growing competition has transformed the outsourcing industry into a global race for market share," said PwC Managing Director Dr. Charles Aird. India's success as the world's back office has motivated other developing countries with well educated and under-employed populations to seek to duplicate their experience."

Although India remains the outsourcing market leader, other emerging economies are seeking to expand into the sector. Among those efforts, the Chinese government has designated 20 cities as outsourcing hubs in an effort to attract more international investment, while the Philippine government has declared outsourcing a priority industry. However, only 16% of Indian service providers see competitors from other emerging economies as a threat.

The survey also found that the economic crisis of 2009 reemphasized the importance of cost savings and efficiency improvement as the top strategic reasons for outsourcing, followed by access to qualified personnel.

Legal services outsourcing emerging

The growth of legal services outsourcing has been strong and is likely to remain so, particularly in India, the survey found. Legal services outsourcing is growing at a rate of 40% annually in India, with about 110 legal services providers in the country. The Philippines and Sri Lanka provide 20% of legal outsourcing.

"The economic benefits of legal services outsourcing are undeniable; it provides the highest profit margins for services providers and as well as the highest cost savings for companies," Aird said. "The emergence of available outsourced legal services and the impact of the economic conditions have changed the perception of the legal industry, once regarded as too sensitive to be outsourced."

Other survey findings:

• 70% of outsourcing deals in 2008 were renewed at the expiration of the first contract, down from 72% in 2007.
• Unrealistic client expectations and the lack of a client outsourcing strategy were the top reasons for contract terminations.
• "Near-shoring" has gained momentum among companies using or considering outsourcing services.

Mauritius - Economic Indicators: Growth rate of 4.3% expected in 2010

On the basis of information gathered on key sectors of the economy and taking into consideration measures announced in the last budget, Gross Domestic Product is expected to grow by around 4.3% in 2010, higher than the 2.8% growth in 2009, says the latest issue of the Economic Indicators.

Exclusive of sugar, the growth rate would be around 4.4% compared to 2.4% in 2009. The main assumptions used are:

• Sugarcane/sugar milling: sugar production of around 480 000 tonnes, resulting in growth of 1.1% compared to 21.1% in 2009,
• Manufacturing Industries: to expand by around 1.7% compared to 0.6% in 2009,
• Construction: to grow at a higher rate of 8.0% as opposed to 3.0% in 2009 mainly due to the frontloading of public sector investment projects (road infrastructure, hospitals, airport, housing, schools, etc.) as announced in the last budget,
• Hotels and restaurants: a growth of around 5.0% based on a forecast of 900 000 tourist arrivals compared to 860 000 in 2009, assuming some recovery in our main markets and positive effects of the holding of the world football competition in the region,
• Transport, storage and communications: to grow by 6.0% slightly higher than the 5.3% growth in 2009, mostly due to expected better performances in air transport and tourism related activities.
• Financial intermediation: to grow at a higher rate of 6.0%, compared to the 5.0% growth in 2009, due to expected pick up of the economy in 2010, and
• Business activities: to grow by 8.5% compared to 8.1% in 2009, explained by expected higher activities in ICT industry as well as in property development.

IASB re-exposes proposals on measuring liabilities for asset decommissioning, legal disputes and similar items

The International Accounting Standards Board (IASB) today published for public comment an exposure draft of one section of a replacement for IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The section contains revised proposals for measuring liabilities within the scope of IAS 37.

IAS 37 applies to liabilities not covered by other accounting standards, such as liabilities to decommission assets and liabilities arising from legal disputes. The IASB previously published proposals to amend IAS 37, including revised measurement requirements. In the light of the comments received the IASB identified a need to develop more guidance on one part of those proposals: the measurement of these liabilities. The proposals published today seek public comment on that draft guidance.

To enable interested parties to see the proposed measurement section in the context of the proposed standard as a whole, the IASB is preparing a working draft of the entire standard and aims to post a copy on its website in February 2010. Until that working draft becomes available, the Liabilities - Amendments to IAS 37 project page on http://go.iasb.org/Liabilities provides a link to a decision summary that contains both the measurement proposals and the other decisions that will appear in the new standard.

The IASB aims to complete the standard, including final guidance resulting from today’s proposals, in 2010.

An IASB ‘Snapshot’, a high level summary of the proposals, is available to download free of charge from the project section of the IASB website.

The IASB invites comments on the exposure draft, Measurement of Liabilities in IAS 37, by 12 April 2010. The exposure draft is available on the ‘Open for Comment’ section on www.iasb.org from today.

HFM Week : Mauritius

In a comparatively short time, Mauritius has established itself as one of the most reliable and skilled financial services centres in the world. HFM Week speaks to some key figures about the region’s growing success in the hedge fund industry and its potential for further growth.