The day of reckoning has almost arrived, and European hedge fund managers are not happy.
JURI, the legal affairs committee of the European Parliament, has voted yes to new legislation that will require more regulation for hedge funds. That regulation will come in the form of more rigorous disclosure and monitoring standards. Specifically, Europe will require registration of funds that have more than $134 million under management and will also cap payouts.
JURI's vote is not the end-all, be-all, however; the same directive will go before the E.U. Parliament's Economic and Monetary Affairs Committee, which will have the final say on May 10. Still, hedge fund managers are girding for the worst. And rather than stick around to see what other onerous regulations might come to pass, some managers want to base their operations elsewhere. Like Asia, for example. Alebris Investments, a London-based fund, will open an office in Singapore; the chief investment officer of Prana Capital has already moved there from London.
That sounds all well and good (as long as you keep the gum-chewing to a minimum), but managers may find that even in Singapore, they won't be able to avoid regulation. That's because Singapore is on its way to passing some distasteful new rules of its own. If new directives from the central bank go into effect, hedge funds will almost certainly face higher costs of doing business. The new rules would force firms to base at least two full-time staff in Singapore (5 to 7% of about 140 hedge funds there currently only have one). In addition, firms with assets exceeding $250 million would have to hire a full-time compliance officer.
If you're looking for a job in hedge funds, now might be a good time to consider heading south.
Write to Julie Steinberg