Hong Kong Defers Authorisation Of Hedge Funds

by Mary Swire, Investors Offshore, Hong Kong

25 January 2002

Speaking yesterday at the Securities and Futures Commission's annual review briefing, Executive Director of Intermediaries and Investment Products Alexa Lam said that a decision on authorising hedge funds in the SAR might have to be postponed because of a wide divergence of views among the respondents to the consultation paper that had been sent out. Lam said the SFC had received a total of 36 responses to the consultation paper.

Issues raised by responses included whether or not hedge funds should implement minimum subscription requirements, whether they should allow redemptions every month or every quarter, and how the SFC should assess and certify who should be able to manage hedge funds. At present, hedge funds aren't authorized and can't be marketed in Hong Kong. They are, however, available to high net-worth investors or institutions, through private banks, intermediaries and directly through fund managers.

"On these issues we may have to go back to the people who have given us views to get a second round of informal consultation, but we are aware that the market is anxiously awaiting a decision and we are doing our very best to come out with a conclusion by the end of the first quarter," Lam said, adding that the SFC remains committed to broadening and deepening the range of products available to Hong Kong investors in the market.

Meanwhile, SFC Chairman Andrew Sheng said he expects that a conclusion will be put before the five-member commission before the end of this quarter.

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