The number of SMART funds registered in The Bahamas grew by 25 percent last year and a similar or greater rate of growth is projected this year, according to the chief executive officer of the Bahamas Financial Services Board (BFSB).
Meanwhile, a draft of a bill to create what Prime Minister Perry Christie has termed a new fund product that will "revolutionize" the financial services sector's ability to do business with the Latin American market is not "very progressed," according to BFSB CEO Aliya Allen.
Allen spoke to Guardian Business following a presentation she made yesterday at the 3rd Caribbean Conference on the International Financial Services Sector at the British Colonial Hilton hotel. She spoke as part of a panel on the theme "The new paradigm for IFCs: New products and new markets".
The panel focused on the need for international financial centers such as The Bahamas to innovate, research and develop new products and seek out new markets if they are to survive in an evolving and ever-restrictive global regulatory landscape, and potentially find new areas of competitive opportunity within it.
Speaking of the growth in the registration of SMART (Specific Mandate Alternative Regulatory Test) funds last year, Allen told Guardian Business that it is hard to project how the market will continue to respond to The Bahamas' offerings, but she anticipates that the sector will "at least meet or even exceed the growth we saw last year" in 2014.
Asked what the growth means for the sector, she said: "From the financial services perspective it means we're getting traction in the fund space, and of course the more funds we're able to accommodate and register in The Bahamas, the more people are needed to service those funds, whether it's on the audit side, the fund administration side, or the investment management side. It could lead to institutions bringing on new individuals and certainly that's the objective, to generate economic opportunities for Bahamians."
As to the status of the new product, which is targeted at the Latin American market, Allen said that it is presently within the remit of a small working group, and focus groups are being conducted to test the product. It will soon be put out for public consultation, she added.
While not wanting to give away too much about what makes it potentially so attractive to the Latin American market, Allen said it creates "enormous opportunity for The Bahamas".
"I don't want to oversell the importance of the product, but we certainly always want to diversify our toolkit and we wouldn't add another product if we didn't think there was a market for it. The market intelligence that we gather through our trips to various jurisdictions tells us there is justification for what we're doing."
With The Bahamas and other financial centers in the region pivoting towards the Latin American market as their ability to attract European and U.S. clients diminishes, Allen said she does not feel that this country will be put at a disadvantage commercially by a language barrier.
"I think we're prepared for it. Certainly we do have a number of individuals in the industry who are bilingual, trilingual. We are trying to facilitate greater language competency through our initiatives and are also working with certainly the university as well to see if we can facilitate courses that enable Bahamians to obtain another language.
"Certainly language competency is important, but is it determinative of your success as a financial services center? I don't think so. English is still the business language and most of your clients are actually competent in it. What it does when you have a familiarity with the language is create that connection and the relationship, so it is certainly an advantage but we think we're developing that already."

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