Parliamentarians will this week debate amendments to the Investment Funds Act that would strengthen the supervisory powers of the Securities Commission of The Bahamas (SCB), better facilitating an enhanced investment fund regulatory regime.
Parliament passed the Investment Funds Bill, 2019 last March to address deficiencies in the country’s investment fund legislation related to insufficient obligations regarding conduct in the valuation, pricing and redemption of underlying securities; and that
managers/advisers of hedge funds were not subject to appropriate oversight.
In addition to broadening the regulatory powers of the SCB, these new amendments intend to further clarify how investment fund managers and administrators conduct themselves.
“Additionally, the bill also clarifies the regime for the investment fund administrator and investment fund manager. Particularly, the licensing of investment fund administrators and the registration of investment fund managers,” the bill states.
“Finally, the bill also elucidates the obligations of the custodian and provides an exception to the appoint of the custodian in circumstances where the operator can satisfy the commission that there is no need for a custodian, due to the structure of the investment fund or the nature of the investment fund’s assets.”
When The Bahamas underwent a peer review under the International Monetary Fund’s (IMF) Financial Sector Assessment Program in 2012, the country’s investment fund legislation failed four of the five principles, leading government to update the laws to bring it in line with international standards established by the European Union (EU) under the Alternative Investment Fund Managers Directive (AIFMD).
The bill goes hand in hand with the Draft Investment Funds Regulations, 2019 which is currently under public consultation and seeks to introduce comprehensive requirements for the licensing of investment funds, as well as introduce comprehensive requirements on the duties and obligations of licensees in the management and operation of their business.