ONE of the world’s leading hedge fund providers is to set up operations in Guernsey. Citco Fund Services has been licensed by the Guernsey Financial Services Commission.

Director William Keunen said it had been attracted by the pragmatic regulatory environment which he believed would continue to make it a jurisdiction of choice for many funds operators.

GuernseyFinance chief executive Peter Niven said it was a real boost for the island’s offering.

‘On the one hand, it is an endorsement of the existing environment which is attracting record flows of business and on the other it adds yet another facet to our administrative capabilities that should prove particularly attractive to promoters and sponsors.’

Citco has more than 30 years’ experience in hedge fund administration and currently administers more than 2,000 with net assets in excess of £250m., including five of the world’s 10 largest.

Guernsey’s funds industry continues to experience record levels of business. Propelled by the introduction of a new registered regime for closed-ended investment schemes, the value of funds under management and administration reached another new high of £140bn at the end of March.

This was £10bn up on the £130bn recorded at the end of 2006 and a 26% year-on-year rise.

The registered closed-ended investment funds regime has been in operation since February and eight such funds received consent in the two months to 31 March, with a further 24 following suit in the period since to reach a total of 32.

The regime has its origins in the root-and-branch review of investment sector legislation that was conducted by a working party under the stewardship of Advocate Peter Harwood.

Central to the subsequent Harwood Report, as it was christened, was the categorisation of funds into ‘regulated’ and ‘registered’. It proposed that for the latter the focus of regulation should be on the licensed Guernsey administrator, reducing the number and scope of schemes that would be regulated directly.

To that end, the registered closed-ended funds regime introduced from February shifts the burden of responsibility for reviewing the promoter and the investment manager and the prospectus or admission document from the GFSC to the proposed Guernsey licensed fund administrator.

This is a development of the qualifying investor funds regime, which was introduced early in 2005 to reduce significantly authorisation times for those targeting experienced investors and through which the GFSC had given consent to 95 such funds by the end of March.

The remainder of the proposals emanating from the report are set to come on stream later this year and into 2008.