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Bermuda To Launch New Hedge Fund Exchange

Tax-news.com

24 October 1999


The formation of the world's first crossing and settlement facility for non-U.S. domiciled hedge funds through a regulated exchange was announced this week by HedgeWorld Limited and the Bermuda Stock Exchange Limited.

The HedgeTrust Exchange will be launched in January 2000 and will be offered exclusively through http://www.hedgeworld.com. HedgeWorld.com is the first e-commerce-enabled web site offering community, commerce and content services to the global hedge fund and alternative investment industry.

The HedgeTrust Exchange will facilitate the matching of buyers and sellers of non-US domiciled hedge funds and the crossing of those hedge fund interests over the Bermuda Stock Exchange. This will provide liquidity for buyers and sellers of interests in hedge funds that are closed or that have restrictive subscription or redemption periods. Indications of interest, buy and sell orders and actual crosses will all reported on an anonymous basis unless otherwise indicated by all relevant participating parties.

The Bermuda Stock Exchange is recognised by the United States Securities and Exchange Commission as a Designated Offshore Securities Market under Regulation S of the Securities Act of 1933.

Hedge funds do not have to be listed on the Bermuda Stock Exchange in order for a HedgeTrust Exchange crossing to take place between buyer and seller, but hedge fund managers must consent to the transfer.

Before the advent of the HedgeTrust Exchange, a hedge fund would normally have to redeem the interests of the selling investor out of the fund's own cash holdings. Thus, the HedgeTrust Exchange seeks to provide additional liquidity to the marketplace and offers a valuable service for the hedge fund.

U.S.-based ERISA and tax-exempt institutions that invest in non-U.S. domiciled hedge funds will be able to indicate expressions of interest and trade on the exchange through Tremont Securities, Inc., a U.S.-based registered broker-dealer and a wholly-owned subsidiary of Tremont Advisers, Inc.

FITX Capital Limited, an affiliate of HedgeWorld Limited, is a trading member of the Bermuda Stock Exchange and will provide the crossing and reporting facilities to the Bermuda Stock Exchange. FITX Capital Limited will also list hedge funds on the Bermuda Stock Exchange.

In announcing the new venture the President and founder of HedgeWorld, Mr. Johann Wong, stated that "we could have probably created our own ECN or electronic communications network and picked any offshore jurisdiction, but we firmly believe that the Bermuda Stock Exchange is the premier and most innovative offshore electronic stock exchange. Bermuda provides many benefits such as additional legislative protection as a result of the recent passage of the Electronic Transaction Act (1999) and an impeccable reputation and infrastructure resources. In particular, we were attracted by the responsiveness and Innovativeness of the Bermuda Stock Exchange and by the very attractive terms that they are willing to extend to actively traded hedge funds that list on the Bermuda Stock Exchange through FITX Capital Limited, which is a trading member of the Exchange."

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