Singapore Exchange Mulls Hedge Fund Listings

by Carla Johnson, Investors Offshore.com

17 March 2006

Singapore Exchange Ltd (SGX) is seeking public comment on a proposed framework for the listing of hedge funds on the Exchange.

In an announcement issued on Wednesday, SGX announced that a "robust framework with necessary safeguards" is being sought for the listing of hedge funds on the exchange.

As hedge funds have different characteristics and risk structures compared to a typical investment fund, it is proposed that the listing of hedge funds be regulated within the existing framework for investment funds with necessary adaptations and amendments.

The new listing framework for hedge funds will have the following key features:

• authorized or recognized under section 286 or 287 of the Securities and Futures Act or offered only to institutions and/or accredited investors;
• a hedge fund denominated in Singapore Dollars must have a minimum asset size of at least S$20 million while a hedge fund denominated in a foreign currency must have a minimum asset size of at least US$20 million;
• where a hedge fund enters into transactions with or through a prime broker, the prime broker (or its parent company) must have a credit rating of at least A for long-term debt from Moody's or Standard and Poor's and P-2 or A-1, respectively, for short-term debt; and have financial resources in excess of US$200 million (or its equivalent in another currency).
• the investment manager of a hedge fund should have at least one principal with a minimum of five years relevant investment management experience.

Under the proposals, a hedge fund eligible for a listing will be admitted to the Official List of the Exchange, although there will be no trading in its units on the Exchange.

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