IN202 - The Listing of Investment Funds on the Channel Islands Stock Exchange

Dixcart Trust Corporation Limited (DTCL) became a Category 2 Listing Member of the Channel Islands Stock Exchange (CISX) in August 2009. Dixcart can therefore list closed-ended investment funds on the CISX.

The CISX is a well recognised stock exchange, with trading and order book facilities, and offers full CREST settlement. The regulatory requirements are well managed and the fee structure is highly competitive. A large proportion of the securities listed on the CISX are domiciled outside of the Channel Islands.

A listing on the CISX increases visibility within the investment community and acts as a symbol of quality. The CISX is a highly credible exchange and is approved by the UK Financial Services Authority. It is an affiliate member of the International Organisation of Securities Commission (IOSCO) and is also recognised as a designated offshore exchange by the US Securities and Exchange Commission.

Types of Investment Fund

The range of funds that can be listed on the CISX, by asset type, include:

• Traditional fixed income and equity funds
• Alternative investment funds, such as property funds and hedge funds
• Structured funds
• Multi-manager funds

Ease of Listing

The CISX Market Authority has adopted a checklist approach to aid sponsors and issuers in the application process.

Issuers may use existing published documents to form the Listing Document. Where the required disclosure items are not included in an existing published document, they may be incorporated in a “wrapper” document appended to the Listing Document. This can help to reduce expensive legal drafting fees.

An application for a listing must be sponsored by a CISX member such as Dixcart, who acts as a point of contact for all communication with the issuer. Applications are received initially in a draft form and reviewed by the Listing Department at the CISX. Comments are returned within 48 hours and final documents are subsequently submitted, together with a formal notice. Once the security is approved, a “Grant of Listing” letter is issued. The Market Authority of the CISX meets daily to consider listing applications.

Criteria, Jurisdictions and Legal Structures

Under the listing rules, investment funds must achieve a spread of risk. There are no minimum subscription levels and the investment fund may prepare accounts in accordance with UK or USA Auditing Standards, International Standards on Auditing or other auditing standards acceptable to the Exchange.

An investment fund with a primary listing on the CISX must be established in a jurisdiction approved by the Market Authority. Generally these are jurisdictions which are considered to have appropriate provisions in place to prevent and detect money laundering and the financing of terrorism, and which are consistent with FATF recommendations.

The CISX retains a list of recognised exchanges for the purposes of a secondary listing.

A full range of legal structures are accepted by the CISX and include:

• Open-ended Companies
• Closed-ended Companies
• Open or Closed-ended Unit Trusts
• Master/Feeder Funds
• Protected Cell Companies
• Limited Partnerships

Flexibility

The ease of listing on the CISX is a particular feature experienced by issuers. Three important factors contribute to this flexibility:

• The CISX Listing Rules, which are internationally recognised, are easy to understand and are based on disclosure of information, rather than relying upon prescriptive requirements.
• The CISX operates outside the EU and therefore none of the EU Directives apply. This is of growing importance to many issuers, particularly from the US and the Far East.
• The CISX is independent from its regulatory authority and has discretionary powers to derogate rules where no investor protection issues arise.

Additional Listings

The CISX also offers the additional services:

• Listing of specialist debt securities
• Listing of equities
• Securitisation business

Contacts

If you require additional information regarding the CISX please speak to Alasdair Milroy or Mark Renouf at the Dixcart office in Guernsey or contact us.