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A robust framework with necessary safeguards is needed for the listing of hedge funds. 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:
- A hedge fund must be:
- authorized or recognized under section 286 or 287 of the Securities and Futures Act; or
- its units must be offered only to institutions and/or accredited investors.
- Similar to an investment fund, a hedge fund must meet the minimum asset size requirements of Rule 404. 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.
- While a hedge fund eligible for a listing will be admitted to the Official List of the Exchange, there will be no trading in its units on the Exchange.
Click here to download the consultation paper which outlines the framework for the listing of hedge funds.
Market participants and members of the public can forward their feedback and suggestions on the proposed framework between now and 28 March 2006 via:
Email: lm@sgx.com
Post/Courier: Singapore Exchange Limited 2 Shenton Way, SGX Centre 1 #19-00, Singapore 068804 Attn: Ruth Tan Issuer Regulation
Fax: 6535 7919