The EU Savings Directive deals with the taxation of savings income in the form of interest payments, and its key provisions came into effect from 1 July 2005. JIM MCDONNELL and MAIREAD O’CONNOR assess the practical impact of the Directive for Irish paying agents in the alternative investment funds sector.

Ireland is now the preferred European jurisdiction for the domiciling of regulated European hedge funds. But in 2005 and beyond, the challenge will be to rise beyond this level and to seek this position on a global basis write BARRY MCGRATH and PETER O’LEARY, adding that developing new products to answer the increasing retailisation and institutionalisation of hedge funds will go a long way to achieving this goal.

On December 2nd the SEC published in final form new rules governing its controversial decision to commence the registration of hedge fund advisers. PETER O’DWYER examines the implications.

Bank of New York established a presence in Dublin in 1994 when it initiated a strategic alliance with AIB Securities Services. Ten years on, the fund administrator is now the largest in Ireland, with assets under administration in excess of $120 billion. Hedge funds are the fastest growing segment within the business, with total assets under administration of $12.9 billion, and expected growth of around 70 per cent for 2004, DAVID ALDRICH tells FIONA REDDAN.

JPMorgan Chase & Co, the global financial services firm, is to acquire Tranaut Fund Administration Ltd., a privately owned hedge fund administration services company based in Dublin and Bermuda. The acquisition is expected to close during the third quarter of the year and is subject to regulatory approval.

One of the world's largest hedge fund administrators is expanding its Irish operations, and will open an additional office there focused on fund accounting in September 2004, employing 150 people.

The Cayman Islands remains the domicile of choice for hedge funds, with 42 per cent of the $1 trillion industry domiciled there. And advisory legislation and the recent recognition of the Cayman Islands Stock Exchange as a recognised exchange by the U.K. Inland Revenue, have further enhanced this position, SEAN SCOTT writes.

There is still some way to go for hedge funds to benefit from pan-European retail distribution, but, as the major alternative managers fast become part of the mainstream, and given developments at EU level, this scenario is quickly becoming reality, writes DAMIAN NEYLIN. He says that Ireland is uniquely placed to benefit from this trend, but that it is vital that the partnership of industry, regulation and government bodies continue to work to preserve its leading position in this increasingly important part of the investment management universe.

Following recent developments in Luxembourg and Germany, the Irish Financial Services Regulatory Authority (IFSRA) has agreed new rules with the aim of reinforcing Ireland’s position as Europe's domicile of choice for hedge funds and alternative investment schemes, PETER STAPLETON writes.

The modernisation of Germany’s investment funds market, leading to the ability to sell hedge funds to the public, is an opportunity for Dublin based fund administrators to service funds being sold into this new market, delegates at a seminar last month were told.

Commissioners at the Securities & Exchange Commission (SEC) are presenting increasingly divergent opinions on what the Commission’s response should be to the SEC Staff Report, which recommended that hedge fund advisers register with the authority, PETER O’DWYER writes. He says that the issue has become increasingly politicised, and that the next US President may have more of a say in the matter than the industry.

EFG Private Bank Limited, the London based private banking arm of EFG Bank Group, has established the first retail fund of hedge funds scheme in Ireland.

Last year BISYS acquired Bermudan hedge fund administrator Hemisphere. 18 months on, Ronan Daly, head of the Dublin operation, looks back on key elements of the deal, and examines how well the transition has gone.

In the eight years since SEI Investments set up its operation in Dublin, numbers employed by the global fund administrator in Ireland have soared from ten to over 140, and the Irish operation is now playing a key part in growing SEI's alternative investment business, which currently has e20 billion in assets under management, writes STEVEN MEYER in this company profile of SEI Investments.

The Alternative Investment Management Association (AIMA), in conjunction with the Dublin Funds Industry Association (DFIA), is to produce, ‘A Guide to Sound Practices for Hedge Fund Administrators’.

Bank of Ireland Securities Services (BOISS) are establishing a hedge fund administration unit in its Dublin operation, which currently employs 340 people. The division will be headed up by Olga Hagerty, unit head, Hedgefund Administration.

Hedge fund industry participants LORCAN TIERNAN and SARAH LONG welcome the Central Bank’s recent approval of retail fund of hedge funds and expect that the growth in directly invested hedge funds will, to a large extent, be matched by the growth in funds of hedge funds.

Having seen an increase in the level of due diligence enquiries from investors looking for more transparency and disclosure in funds, PHILIP CRAIG looks at why Dublin is still proving to be an attractive proposition for fund administration.

With the increase in hedge fund quantities there has been a decrease in the quality of products coming on line, but STUART DRAKE believes that this is pushing administrators service levels up.

Dublin, as a centre for hedge fund management, is growing in prominence, and there are now 12 European single-manager hedge funds being managed in Ireland writes CARL WHYTE.

The hedge funds sector has been given a boost by Luxembourg’s decision to ease its regulatory regime for hedge funds. The new legislation, which is expected to be prepared in draft form by the summer, is expected to reduce the level of supervision on funds and ease listing requirements for hedge funds. Due to less stringent authorisation requirements in Ireland, European hedge funds are usually listed in Dublin rather than Luxembourg, but the legislation is not expected to harm Dublin’s position, and has been welcomed by the Dublin hedge funds community.

The acquisition of International Fund Services (IFS), a provider of fund accounting and administration services, by State Street continues the consolidation in fund administration, which has seen BISYS acquire Hemisphere and BNP Paribas acquire Cogent in the past few months.