France Drafts Hedge Fund Manager Code Of Conduct

by Philip Morton, Investors Offshore.com

13 February 2002

The French trade association for asset managers, AFG-ASFFI, announced on Monday that it is in the process of drafting a code of conduct for hedge fund managers, which it plans to present to the Commission des Operations de Bourse (COB) at the end of this month.

According to Benedicte Vincent, the Head of International Relations at the Association Francaise de la Gestion Financiere, the new code of conduct will be the first of its kind, as in countries where regulators have been forced to address hedge funds, the focus has been on regulating the product rather than the manager. It is hoped that this new measure will allow the Frenxh hedge fund industry to be monitored without imposing upon it too many restrictions.

The draft code will offer a definition of alternative investment management, and will require French fund firms to meet standards on internal controls, company structure, staff qualifications and management of conflicts of interest. It will also deal with the investment process, operations and transaction accounting, and liquidity risks. The issues of advertising and solicitation will also be addressed.

M. Vincent revealed that if the code of conduct is approved by the COB, it may be operational by the summer. However, it is not known if this latest move will make the COB more sympathetic to the AFG-ASFFI's pleas to lift restrictions on the use of derivatives by alternative investment fund managers.

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