By Joey Garcia, a Financial Services Partner at ISOLAS and Chairman of the Gibraltar Funds & Investments Association (GFIA). He was the advisor to GSX Limited through its authorisation process
With Listing Members now signed up and approved, and listing applications being filed with GSX Limited (GSX), interest is turning towards the listing process itself. What are the benefits and how does the listing process work?
GSX was granted its authorisation to commence its operations as Gibraltar’s first ever regulated stock exchange on the 10th October 2014 with the listings business expected to commence during the first quarter of 2015. GSX currently operates as a listing only exchange for open-ended funds that are licensed, registered, authorised and/or regulated as a Collective Investment Scheme (CIS) by a competent authority empowered to supervise financial services in a GSX recognised State. To that end, GSX is a regulated exchange that operates in many ways as a European fund distribution platform. Some allocators are restricted from investing a % of a fund or clients assets in vehicles that are un-regulated or unlisted and GSX provides a straightforward solution to a European listing option for a fund. Similarly, a listing can form an important part of any investors due diligence process on a fund and the approval of a regulated exchange, support from a Listing Member (or ‘sponsor’), and approval from the listing authority can provide a strong message to potential investors.
GSX offers a simple, cost effective, and professional listing option for a fund in a European jurisdiction. In the most recent independent Global Financial Centres Index (16th Edition) Gibraltar ranked higher than the Cayman Islands, Malta, the Isle of Man or Jersey as a Financial Centre.
The advantages of a GSX listing
GSX provides a secure platform for investors and managers to come together, and it delivers a reliable, fast to market, and cost effective service that enables applicants to market to investors looking for greater transparency and visibility through an EU listing.
The GSX portal allows investors to filter their searches by individual or multiple criteria in order to identify their preferred choice of investments including geography, asset class, manager, and currency.
Over time, GSX plans to adopt a graduated progression to a full service stock exchange providing trading and execution services across a wide range of products, but not limited to debt and equities.
Listing of open-ended collective investment schemes: need to know
Other than the conditions specified in the CIS Code, the following general conditions must be met for those wishing to apply for listing:
l An applicant must be duly incorporated or otherwise validly established according to the relevant laws of its place of incorporation or establishment of a GSX Recognised State, and must operate in conformity with its Constitutive Documents.
l An applicant must be an Open-Ended Fund and must be regulated by the Competent Authority of a GSX Recognised State or be otherwise acceptable to GSX Limited and the Listing Authority.
l An applicant must have audited accounts for the last financial year.
l An applicant may not change its principal investment objectives and policies as set out in its Listing Particulars unless the consent of the unit-holders representing a majority of the Units of the applicant that are in issue has been obtained in advance.
l An applicant must not be permitted to issue bearer shares and/or Units under its constituting documents.
l The applicant must satisfy GSX and the Listing Authority that its Controllers together with any appointed investment manager have sufficient and satisfactory experience in the management of investments of the type in which the applicant intends to invest, or currently invests.
l The Controllers of the applicant must be able to demonstrate their ability to act independently of any appointed investment manager of the applicant.
l The aggregate market value of the Units of an applicant must be at least €1,000,000 or the foreign currency equivalent within 12 months of the applicant’s launch if the applicant is a new Fund, or above €1,000,000 if the Fund has been active for more than 12 months.
l Once listed, an applicant must continue to comply with all requirements of the CIS Code.
Application process: an outline
Typically, the fund will select a Listing Member (who are approved by GSX, and listed on the GSX website). The Listing Member will manage the application process adhering to the application for admission to listing set down in the CIS Code.
The Listing Member is then responsible for dealing with GSX on all matters relating to the listing application and will work closely with their advisors and the applicant in preparing the applicant for listing. The Listing Member will also work with the applicant post-listing in ensuring that the applicant is aware of and adheres to its continuing obligations, fulfilling its regulatory responsibilities.
The applicant will require that its Listing Particulars comply with the GSX requirements. This will involve the disclosure of detailed information relating to the fund and its business, including the fund’s controller names and contact information, its location, legal status, investment strategy and assets under management.
Once an application has been completed and submitted, membership is then considered by GSX’s Membership Committee. Documents that need to be submitted include the application for the listing, as well as a completed checklist, and the listing particulars which will need to be compliant with the Listing Code. Once the application is completed, GSX will then consider the application and, once approved, deliver this to the Listing Authority.