INTERNATIONAL: IOSCO Consultation Report on the Regulatory Environment for Hedge Funds – A Survey and Comparison

Thursday March 9 2006

On 9th March 2006, IOSCO published a Consultation Report on the Regulatory Environment for Hedge Funds. Comments on the report can be submitted until 31 May 2006 after which time a final version of the Report will be submitted to the IOSCO Technical Committee for consideration. The Report can be found at the above link or by opening the attached pdf.

The Report documents the varying approach taken towards hedge-fund regulation in 20 Member States.

Issues covered include strategies, definition, registration, disclosure, advertising, reporting, examination and disciplinary actions. The four conclusions drawn in the report are:

*no Member has adopted a formal legal definition of the term `hedge fund`

*hedge fund advisers are regulated in most jurisdictions

*few jurisdictions report any significant `retailisation` of hedge funds although some regulators anticipate this changing

*there have been some incidents of fraud relating to hedge funds in the reporting jurisdictions.

The Report also identifies areas of possible future work. These include permitted investment strategies for retail CIS, registered fund of funds, valuation and risk rating.