French Hedge Funds Just Around The Corner

by Carla Johnson, Investors Offshore.com, London

03 September 2004

Well behind most other European financial markets, the French financial regulator, L'Autorite des Marches Financiers (AMF) is finally getting around to finalising the new rules that will allow fund managers to launch French-based alternative funds from November.

French-based hedge funds are expected to be permitted in one of two new fund classes allowed by the AMF: the Aria, a French acronym for lightly regulated investments; and Ariael, a leveraged version of the Aria.

Aria funds were expected to be available by now, but the AMF has struggled to set up the rules in time. It is especially unsure whether to set minimum investment levels, and what these should be. In France, it seems against the principle of 'Egalite' to exclude poorer people from particular types of investment.

The ARIA (Agrees a Regles d'Investissement Allegees) will be marketed through 'prime brokers', subject to tight regulation, another innovation for France. When the AMF put out its proposed rules for consultation, it was expecting a maximum of 30 responses, but received 60.

Still, AMF savings chief Jean-Marc Delion insists that the AMF intends to create a more competitive and more transparent market-place. He worries that alternative investment in France amounted last year to no more than 2% of total savings investment.

The AMF originally set out its plans for French hedge funds (les Hedges Funds!) in early 2003, and a final set of rules is now expected sometime during the autumn. It is thought that Euros 250,000 may be the minimum investment level - not too accessible for sans-culottes, perhaps; but then even poor French are pretty rich nowadays.

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