Hong Kong’s financial regulator, the Securities and Futures Commission is to review the regulation of hedge funds with a view to relaxing certain rules governing the sales of funds to investors, it has emerged.
The SFC is said to be currently considering changes to a number of key rules, including an expansion of the number of jurisdictions in which fund managers and advisors must be licensed.
Existing SFC rules stipulate that advisors and managers must be registered and based in Australia, France, Germany, Ireland, Hong Kong, Luxembourg, the United Kingdom or the United States. A hedge fund must also have at least two investment executives with a minimum five years' hedge fund experience each.
It is thought that these and other restrictions are hampering the development of the hedge fund industry in Hong Kong, as many foreign fund firms have to create special products to remain compliant with SFC rules.
"I have talked to some people who had wanted to sell hedge fund products to retail investors and then backed off when I told them what was required for authorisation,” Jeremy Lam, a partner with law firm Deacons, was quoted as saying by The Standard.
He added that the SFC is likely striving towards striking a balance between “protecting investors and expanding the industry.”
The SFC has stated its intention to “review its hedge fund guidelines this financial year, based on the experience gained in authorising 12 hedge funds so far.” It also intends to consult the industry over future changes.
Source: OCRA Worldwide
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