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Portfolio > Alternative Investments > Hedge Funds

AIMA Welcomes FSA Discussion Paper on Hedge Funds

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LONDON (–The Alternative Investment Management Association is coordinating a response by its members to last week’s discussion paper on hedge fund marketing rules, issued by the Financial Services Authority of the United Kingdom.

AIMA director Emma Mugridge said in a statement that the response will be submitted to the FSA by the Nov. 29 deadline.

AIMA, headquartered in London, is an international industry group that provides a non-commercial, educational voice for hedge fund managers, prime brokers, futures commission merchants, and their service providers, in speaking with regulators, media, and the professional investor community.

AIMA “recognizes the need for open discussion regarding potential developments of the U.K. regulatory regime,” according to its statement. It welcomes the FSA paper’s accurate summary of the current regulatory environmental in relation to hedge funds as well as the “very clear questions [it poses] for consideration by the U.K. hedge fund industry and other interested parties.”

The Paper’s 12 Questions:

1. Do respondents agree that there is no strong case for changing the regime for the marketing and selling of hedge funds to sophisticated investors?

2. Do respondents believe that hedge funds, or certain types of hedge funds, can be suitable products to be marketed and sold to the retail sector?

3. Is there significant demand from firms to sell hedge fund products to the retail sector? Would there be significant demand for hedge fund products from retail customers if we liberalized rules to allow them to be sold to the retail sector?

4. Are there any other options not considered in this paper that respondents think we should consider in relation to the marketing and selling of hedge funds in the U.K.?

5. Do you think that hedge funds would wish to comply with the current regulatory regime for authorized CIS [collective investment schemes], if the categories of authorized funds were extended to cover certain types of hedge fund strategy? If not, what aspects of that regime would need to be changed and in what manner to suit particular types of hedge funds?

6. Which types of hedge fund strategy do respondents think we should consider in our forthcoming fundamental review of the CIS Sourcebook?

7. If we were to authorize certain hedge fund strategies as described above, what strategies should we and/or the industry adopt to provide retail customers with appropriate information about the risk profile of hedge funds?

8. Would there be significant demand for shares in hedge funds if we introduced new Listing Rules to allow them to list?

9. What safeguards would we need to build into our Listing Rules, both in terms of eligibility for listing and additional disclosure requirements, if we were to consider such a change? Should we consider setting a high minimum share denomination at issuance?

10. Do you consider our regulatory approach toward U.K. hedge fund managers to be appropriate? Are there any changes we should consider making, within the constraints set down under the [Financial Services and Markets Act 2000]?

11. Is our approach to monitoring the overall hedge fund market appropriate? Are there additional actions we should consider taking with respect to hedge funds that would improve confidence in the U.K.’s financial markets?

12. Is our approach to implementing our financial crime objective appropriate for hedge fund mangers? Is there multilateral action to which we should contribute through international forum?


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