WEST PALM BEACH, FL (HEDGECO.NET) – The Hong Kong hedge fund industry regulators have decided to review guidelines later this year amidst some complaints by some hedge fund managers. The major issueis that a number of of the rules instituted by the Securities and Futures Commission [SFC] are difficult to apply. Hedge fund managers and investment advisers have problems with the laws governingthe sale of investment products to retail investors.
Jeremy Lam, a partner with the law firm Deacons, stated that the Securities and Futures Commission (SFC) is expected to seek industry views on several key regulatory issues, which have been difficult to apply in his opinion. The SFC said it will be reviewing the laws governing the sale of hedge fund financial instruments to retail investors later this year.
According to the SFC�s standing laws, hedge funds operating in Hong Kong must �have at least two investment executives with a minimum five years hedge fund experience each, while the manager and advisers must be licensed and based in Australia, France, Germany, Ireland, Hong Kong, Luxembourg, the United Kingdom or the United States.� The SFC is likely to expand the acceptable jurisdictions to include more countries according to Mr. Lam. He further said such regulations �are not easy to comply with but I suspect that the SFC wants to strike a balance between protecting investors and expanding the industry.�
Another area of likely regulatory review is the provision governing performance fee payments. Currently, SFC laws authorize such payments to be made once a year. According to Lam, hedge fund products are structured for monthly or quarterly basis, and performance fee payments should also be allowed to follow such standards, which are also used in countries such as the United States.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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