Hong Kong's SFC Considers Hedge Fund Options For Retail Investors

by Mary Swire, Tax-news.com, Hong Kong

11 June 2001

Hong Kong's Securities and Futures Commission (SFC) has announced that it intends to hold consultations over opening hedge fund investment vehicles to sophisticated retail investors. Currently there are no authorised hedge funds in Hong Kong but the SFC has given in to mounting pressure from the region's fund managers who have repeatedly urged the Commission to address the situation.

Andrew Procter, executive director of the SFC has said that, if given the go ahead, the proposal would attract a significant amount of fund management activity to Hong Kong. 'This would be an important step,' he explained to the local media, 'to expand Hong Kong's fund industry, to ensure it becomes the fund management centre of Asia.'

The SFC aims to release a draft of its guidelines for hedge fund investments by August or September this year, but it is already adamant that only experienced and sophisticated investors - particularly if they are retail investors - will be allowed and to sort out the men from the boys, an extremely high minimum transaction level will be enforced. 'The SFC accepts that there are some sophisticated retail investors who would like to trade in hedge funds,' said Mr Procter, 'but the SFC wants to ensure only sophisticated investors who well understand the risks are involved in it.'

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