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25 August 2016
Chief minister's statement on EU referendum
Following the United Kingdom's vote to leave the European Union, the chief minister published a statement noting, in summary, that although there is likely to be a period of uncertainty across the United Kingdom and Europe, Jersey will maintain strong access to European markets through its broad and robust third-country agreements.
The recent advice issued by the European Securities and Markets Authority that "no significant obstacles" exist to the application of the alternative investment fund managers (AIFM) marketing passport to Guernsey and Jersey is welcome news and supports the chief minister's confidence in Jersey's ability to weather the effects of this change (for further details please see "ESMA advises "no significant obstacles" to application of AIFMD marketing passport to Channel Islands").
Following the result of the Brexit referendum, the United Kingdom's credit rating was downgraded by two notches, from AAA to AA by Standard & Poor (S&P). Consequently, Jersey's credit rating was also downgraded by one notch, from AA to AA-.
In its report, S&P noted that "Jersey's existing relationship with the EU will not be significantly affected by the exit of the UK from the EU" and "the risks to Jersey's financial sector and its fiscal performance are balanced by its still significant economic resilience". According to Treasury and Resources Minister Senator Alan Maclean:
"This is the best outcome that Jersey could have hoped for following the lowering of the UK's rating by two notches. It reflects our ability to demonstrate that our plans have been based on managing risks to Jersey's economic and fiscal performance."
Further, the chief minister stated as follows:
"We have been planning for Brexit, we are already outside the EU and we have been successfully developing our economic and international links with countries across the globe. These facts, together with S&P's judgement that Jersey is institutionally strong are reflected in the minimal nature of our downgrade."
Increases to fees
Several industry players had been involved in responding to the Jersey Financial Services Commission's (JFSC's) consultations on how fees paid by regulated business are calculated and levied. Based on the feedback it received, the JFSC has decided to modify a number of proposals contained within the consultation paper and delay implementation for 12 months. The JFSC agreed to drop the proposed "complex" fee that would have created unwelcome uncertainty for fund managers.
The proposed fee increase of 7% came into force on July 1 2016 in relation to alternative investment funds (AIFs), AIFMs, certified fund certificate holders, recognised fund permit holders, control of borrowing funds and registered persons.
Amendments to codes of practice
On May 18 2016 the JFSC published feedback on its Consultation on Amendments to Codes of Practice. These amendments seek to:
The amendments will come into force on September 1 2016. In order to assist regulated entities, clean and tracked changes versions of the codes are available on the JFSC website.
JFSC Consultation 3/2016: MiFID II
Published on April 25 2016, Consultation 3/2016 sought input as to whether Jersey should introduce an EU Markets in Financial Instruments Directive (2014/65/EU) (MiFID II) equivalent regime and set out certain potential benefits and costs of doing so. The introduction of a MiFID II equivalent regime could create an opportunity for Jersey's investment businesses to participate in the EU passport for professional investors, as long as Jersey's investment regime is judged to be an equivalent to MiFID II. The consultation closed on July 15 2016. Industry players, in conjunction with the Jersey Funds Association, have been involved in submitting an industry response that considers the potential disadvantages to the funds industry in adopting a MiFID II compliant regime, particularly in the context of the UK public's vote to leave the European Union.
JFSC change programme – second paper
The JFSC issued the second paper in its Change Programme on April 15 2016. This paper explains how the JFSC is changing the way that it will supervise and interact with firms in the future, and how those changes are likely to affect regulated businesses by simplifying and speeding up their interaction with firms.
JFSC publishes crowdfunding FAQs
The JFSC published a set of frequently asked questions (FAQs) in respect of crowdfunding on May 20 2016, which:
The publication of the FAQs comes at the same time as the Financial Conduct Authority's call for input on crowdfunding rules, seeking views on both loan-based and investment-based crowdfunding.
MONEYVAL report published
On May 24 2016 the Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) published a report assessing Jersey's compliance with the Financial Action Task Force standards. The report noted that Jersey has a mature and sophisticated anti-money laundering regime, as well as an internationally recognised mechanism to ensure transparency of beneficial ownership information.
Amended outsourcing policy
On July 18 2016 the JFSC issued a consultation paper seeking input on proposed changes which will:
A draft of the amended outsourcing policy and guidance notes is available for review. The consultation closes on September 30 2016.
Draft Proceeds of Crime (Miscellaneous Amendments) (Jersey) Regulations 201-
On May 4 2016 the chief minister lodged the Draft Proceeds of Crime (Miscellaneous Amendments (Jersey) Regulations 201-. The draft regulations focus mainly on the implementation of a policy to regulate virtual currency in Jersey. This reflects the growing importance of financial technology to Jersey, as the technologies being developed have a huge economic potential for the island.
On May 10 2016 the JFSC announced that it had issued a request for information from financial services firms in order to be fully informed on any material connections between Jersey and Mossack Fonseca. Thus far, only a small number of relevant connections have been found, all of which are being examined by the JFSC.
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