Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Hedge funds and private equity firms are hoping a resurgent right wing in European politics will give them stronger support when they call for changes to proposed legislation they see threatening their industries.
The coalition of European conservative parties won a decisive victory in elections last week, taking over 260 seats in the European parliament compared with around 160 seats for its socialist rivals.
"We are viewing this quite positively," said Javier Echarri, secretary general of the European Private Equity and Venture Capital Association.
" are expected to be able to deal with financial regulation on a calmer basis with more understanding than the more emotional debate that we have seen in the parliament in past years," Echarri said.
On Wall Street – A Connecticut bill that would have imposed transparency and licensing requirements on hedge funds failed to be signed into law Wednesday when the state house of representatives ran out of time to vote on the measure.
The legislature’s special sessions will now focus on the state budget and, therefore, will not be able to address the proposed legislation.
“We’ll have to bring it up again next year,” Ryan Barry, co-chairman of the state house’s joint banks committee and the main supporter of the bill, told Dow Jones.
Times Online – The role of the City of London as one of the world’s preeminent financial centres came under attack for the second time in two weeks yesterday, this time from proposed EU rules for private equity and hedge funds.
The EU wants private equity firms with more than €500 million under management and hedge funds with more than €100 million of funds to file detailed financial information with the Financial Services Authority. Private equity firms will also need to file figures relating to debt, risk and cash.
If the European Parliament approves the proposed legislation, about 1,000 British companies – owned by private equity firms either headquartered or with an office in the EU and with more than €500 million under management – would be saddled with annual compliance costs estimated at about £30,000.
Reuters China – Abu Dhabi Investment House, a Gulf Arab bank, is planning a $1.5 billion (824 million pounds) private equity fund to invest in real estate and manufacturing in China with a local partner, a senior executive said on Sunday.
An agreement to launch the fund will be signed within two months, said Rashad Janahi, ADIH’s managing director.
The Gulf firm is eyeing China at a time when a raft of tightening measures have chilled its real estate market, with sluggish transactions and falling prices in major cities. For a related story, double-click on.
TheStreet.com – "Desperate times call for temperate measures" might be a (corrupted) saying that describes a prudent approach to the maelstrom of the stock market.
Mass redemptions resulting from turmoil in the hedge fund industry are a major factor in the market’s outsized swings in recent weeks. So it might seem ironic that three of the highest-rated mutual funds, as measured by TheStreet.com Ratings, are essentially hedge funds for Everyman.
TIANJIN, China (Reuters) – Abu Dhabi Investment House, a Gulf Arab bank, is planning a $1.5 billion (824 million pounds) private equity fund to invest in real estate and manufacturing in China with a local partner, a senior executive said on Sunday.
An agreement to launch the fund will be signed within two months, said Rashad Janahi, ADIH’s managing director.
The Gulf firm is eyeing China at a time when a raft of tightening measures have chilled its real estate market, with sluggish transactions and falling prices in major cities. For a related story, double-click on.
And China’s manufacturing sector, especially export-oriented and labour-intensive firms, are being hit hard by weakening demand from the United States as well as Europe.
SEOUL (Reuters) – South Korea will allow mutual savings firms and online-based companies to sell investment funds from next February, and draw up measures to cut sales fees for long-term investors, a regulator said on Sunday.
The Financial Services Commission FSC.L said in a statement that it will also tighten investor protection rules for fund sellers to teach customers risks from an investment, as well as its commissions and fees.
"South Korea’s fund sales market has been in the oligopolistic structure, which lacked competition for services and commissions between sellers," the statement said.
Currently, only banks, securities houses and insurance companies are authorised to sell investment funds which accounted for nearly 10 percent of the country’s household financial assets in 2007.
The City’s regulator has threatened to impose unlimited fines on investors that breach its new rules on betting against UK bank shares amid a flurry of late disclosures by hedge funds.
The warning came yesterday as Gordon Brown promised new permanent rules to curb short-selling once the Financial Services Authority (FSA) ban expires in January. The Prime Minister said: “We’ll be reviewing over the next four months and I think you will find new rules for the future.”
Such a move could further threaten the hedge funds industry, which has grown explosively in London. The FSA last week introduced measures to tackle short selling of UK bank shares, fearing falling prices would undermine the financial system.
It ruled that any short position greater than 0.25 per cent of a market value of any 34 named financial stocks must be disclosed by 3.30pm on Tuesday this week. A number of other companies have since approached the regulator asking to be included on the list.
Wealth Bulletin – The UK’s financial regulator has hired Australian Andrew Crain to head up the team that oversees the roughly 40 largest hedge fund managers that operate in the UK. Crain, a former regulator in his home country, assumes his new job later this month.
The team he will run sits within the wholesale investment division of the Financial Services Authority, the UK’s equivalent of the US Securities and Exchange Commission.
The appointment comes as the UK regulator is stepping up efforts to discourage unsavoury behaviour, including insider trading and other market abuses by hedge funds and others.
Those efforts have included measures that are widely unpopular among fund managers, including a rapidly introduced rule requiring disclosure of short positions — or bets that a stock will fall — in certain circumstances.
Times Online- Proper consultation is the rock upon which good regulation is founded. And for the Financial Services Authority, consultation is in its DNA. So when it does the unthinkable and drops a bombshell without warning or discussion — as last week with the announcement of the Short Selling Instrument — people are bound to be left shellshocked and confused, especially if they are lawyers under pressure from clients to advise on what needs to be done.
Designed, allegedly, to bring greater transparency to the market in the aftermath of the recent rights issues shambles by HBOS and Bradford & Bingley, the measure could have been called the “short notice instrument” because there were mere days between its announcement and its operational effect. The FSA’s justification for the move was that market conditions gave rise to increased potential for market abuse and therefore “immediate measures” were necessary to “maintain market confidence and prevent potential abuse during rights issues”.
Daily Telegraph- German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
Uwe Beckmeyer, transport chief for Germany’s Social Democrats, said his party would call for joint measures by the G8 powers to prohibit leveraged trading on energy contracts. "It’s an extreme step but it has to be done," he told the Berlin media.
