LSE Targets Hedge Funds With New Specialist Market

by Phillip Morton, Investors Offshore.com

16 July 2007

The London Stock Exchange has announced that it will launch a dedicated new market for issuers of specialist funds.

The Specialist Fund Market will meet demand from both issuers and institutional and other professional investors for a quotation on a regulated market in London, that provides sufficient flexibility for specialist vehicles such as single strategy hedge funds and private equity vehicles. This will satisfy a market need which will exist between AIM (Alternative Investment Market) and the Main Market once the FSA’s new Unitary Regime is introduced.

Commenting on the launch, Martin Graham, Director of Markets at the London Stock Exchange explained:

“Hedge funds and private equity are an increasingly important asset class that pension funds and other institutional investors want access to in order to diversify their overall portfolios and improve their returns."

“We already offer investors and issuers a choice of routes to market according to the types of investors that issuers wish to target and the risk premiums sought by investors. The introduction of the Specialist Fund Market enhances that choice by creating a separate, clearly-labelled market for alternative assets such as single strategy hedge funds and private equity vehicles. It will enable the London markets to continue to meet what we know is a strong demand among issuers and investors for a regulated market quotation suitable for these more complex entities, while remaining clearly delineated as a professional market.”

The Specialist Fund Market will be open to both UK and international funds, and will be complementary to the FSA’s proposed Unitary Regime for investment entities listing on the Main Market. Issuers that wish to market funds to a wider audience, including retail investors, will continue to have access to the Main Market, which offers the potential for inclusion in index tracker funds and to AIM, and which has been very successful in attracting investment entities, primarily property funds or other conventional investment funds.

The Specialist Fund Market will be a Regulated Market operated in accordance with EU Directives. The FSA will approve issuers’ prospectuses in line with the Prospectus Directive, and monitor their conformity on an ongoing basis with the Transparency Directive, Market Abuse Directive and other EU requirements. Once approved by the UKLA (UK Listing Authority), securities must also meet the Exchange’s Admission and Disclosure Standards in order to be admitted to trading on dedicated segments of the Exchange’s next-generation trading services, SETS and SETSqx. Specialist Fund Market securities will not be included in the FTSE UK Index Series and will therefore not be included in index tracker funds.

Recommended