Sabrina N. Gordon, Business Reporter

Capital Blu Management, the newest firm to pop up in the alternative investment scheme sector, will in March place an application before the Financial Services Commission to legitimise its operation, says the company's principal.

In the meantime, however, Capital Blu is willing to accept investments, but only if remitted to its offshore operation in the British Virgin Islands, chief executive Donovan Davis Jr told the Financial Gleaner.

"We have had initial discussion with the FSC, and submitting an application will now move the discussion forward," he said.

Davis, a Jamaican whose company operates out of Melbourne, Florida, is using the hook of 'free' workshops on the foreign exchange market and wealth creation to be delivered over three days, starting today, in Kingston to whet interest in his company.

Capital Blu will hold similar seminars in Trinidad, but is yet to set a date, followed by Hong Kong.

Offices across the world

The company claims to have offices across the world - Philippines, London and Sydney - but its website offers little detail about its locations, and no information, not even the names, on the people behind the company.

Davis says his plan, eventually, is to establish a hedge fund in Jamaica, saying again that his intent has been conveyed to the FSC.

Essentially, a hedge fund is a speculative investment vehicle that typically trades in derivatives and other risky and complex financial instruments.

They take big risks for high returns, usually on behalf of selected clientele.

Foreign currency trading

The investment schemes operating here are all said to trade foreign currency derivatives, the same area that Capital Blu plans to explore.

"In our talks with the FSC, we seem to be on the same page in terms of the structure," said Davis.

FSC spokesperson Nadene Newsome confirmed that Capital Blu has indicated its "intention to apply for a licence as a securities dealer", but said the type of discussions referred to by Davis would not be in the remit of the FSC.

Hedge funds are typically registered in tax havens, and while Jamaica is exploring the possibility of becoming an offshore centre, the studies to guide the policy decision are just being done.

Davis reiterated a comment initially published in the series of full page advertisements he has been running in local papers that he would not accept any investment within Jamaica until the licensing process is complete - meaning he will not collect funds here - but adds that he is quite willing to trade accounts on behalf of clients but they must send their funds to the BVI.

Capital Blu says it started operations in 2001 in the United States, but has been trading funds only for the last four and a half years.

The website advertises services in asset management, trader education and consultancy on the foreign exchange market.

Foreign currency trading is said to be a US$3 trillion a day business globally. A group of some 20 Jamaican traders, whose operations consultant Gavin Chen is guiding towards licensing, trades about US$800 million per day.

The hedge fund industry is estimated at US$2.1 trillion with 80 per cent of the funds held by companies registered in the Cayman Islands.

sabrina.gordon@gleanerjm.com