Hong Kong Investment Expert Urges Minimum Hedge Fund Subscriptions

by Philip Morton, Investors Offshore.com

06 November 2001

Following the announcement by the Hong Kong Securities and Futures Commission that it has issued a consultation paper discussing the possibility of offering hedge fund investments to individuals, a leading legal expert has urged the authorities to pursue a market segmentation approach by introducing a minimum subscription level.

There has been controversy surrounding this issue, as many other hedge fund experts feel that a high subscription level may not in itself discourage all inapproriate investors, and may additionally encourage investors to overstretch themselves financially in order to meet the deposit levels.

However, James Walker, partner of the Asian funds group at international law firm Clifford Chance, believes that minimum deposit levels similar to those in place in the United States would be appropriate. 'The initial minimum subscription level for the hedge fund sales would help to ensure only the investors who could afford the risks would invest in the products,' he explained.

The SFC could introduce a sliding scale, suggested Mr Walker, with the minimum subscription levels set according to the risk profile of the particular hedge fund, and a review after one year to see if the levels need changing.

http://biz.scmp.com/ZZZDH2XX2TC.html http://www.tax-news.com/asp/story/story.asp?storyname=6061

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