Hedge Fund Reader : Hong Kong Not to Compromise on Licenses

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November 09, 2006

Hong Kong Not to Compromise on Licenses

-- By Pushpa Sathish, Staff Writer

Perhaps the U.S. Securities and Exchange Commission should take a leaf from the book of its Hong Kong counterpart, the Securities and Futures Commission. The Asian country’s securities regulator has decided to put its foot down and stand firm on licensing issues for hedge funds. With Singapore exempting licenses for funds that have 30 or less investors, it was expected that Hong Kong would follow suit in order to grab a larger share of the hedge fund market.

Asia is seen as a potent market for the growth of hedge funds, and naturally, funds are expected to mushroom where there are less rules and regulations to tie their operations down. But Hong Kong is sticking to its policy of mandating licenses for hedge funds, irrespective of the kind and number of investors they have, according to Alexa Lam, executive director at the Securities and Futures Commission. The Hong Kong regulator is tying up with the SEC to conduct inspections of funds registered with the SEC and licensed in Hong Kong.

As of April this year, hedge fund managers in Hong Kong doubled to reach 118 from a year ago, with assets under management rising 268 percent to touch $33.5 billion. In contrast, Singapore’s industry grew 51 percent to reach 109 fund managers with assets doubling to touch $6.1 billion over the same period.

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November 9, 2006 in Regulation | Permalink