The same factors that enhanced the development of the banking, insurance, and mutual fund industries in the Cayman Islands proved of similar benefit to the development of the capital markets and structured finance transactions. Specifically, the political and economic stability, the absence of taxation, withholding tax and exchange control and the presence of highly sophisticated service providers provided a hospitable financial environment for the development of the debt issuing special purpose vehicle. Furthermore, the Cayman Islands Government, introduced no disincentive by way of unnecessary regulation: capital markets securitizations and the structured finance transaction falls outside from the provisions of the Mutual Funds Law. Specific legislation provided additional certainty on the question of netting and set off.
- The Cayman Islands provide a hospitable regulatory environment in which to conduct structured finance transactions with an English common law base.
- Special purpose vehicles can be structured in the Cayman Islands to be "bankruptcy remote".
- Specific legislation provides certainty for netting and set off.
- Cayman islands special purpose vehicles regularly receive Triple A ratings from the ratings agencies.
- An abundance of first-class financial institutions with fully staffed branches in the Cayman Islands facilitates the establishment of structured finance transactions.
- The trend of multinational institutions to engage in offshore structured finance transactions continues to accelerate.
- The Cayman Islands continue to be the venue of choice from which to base complex structured finance transactions.