Canada’s securities regulators have decided not to introduce specific regulations governing hedge funds.
“We have a full group of rules that apply to all those sorts of vehicles,” David Wilson, chairman of the Ontario Securities Commission, told reporters yesterday. “So we think the existing rules, by and large, if they are properly used and properly implemented and complied with, will do the job.”
Mr. Wilson made the comments after a speech at a Toronto securities conference. In his speech he said the Canadian Securities Administrators, the umbrella organization for Canada’s provincial securities commissions, has “pretty much decided that hedge funds per se do not require their own separate regulatory regime.”
However, he said regulators are reviewing how some hedge fund-related products are sold to retail investors. In particular, he said the CSA is considering new rules governing “principal protected notes.” These notes typically come with a guarantee on the principal amount invested and they are often tied to the performance of a group of hedge funds. Some sell for as little as $500 apiece and they are generally sold without a prospectus.
