Marketing of Hedge Funds to Retail Customer
Commenting on the feedback received covering the marketing of hedge funds to retail customers, Gay Huey Evans, Director of Markets and Exchanges said: "Generally, the feedback we received did not indicate a great desire on the part of hedge funds or investment advisers to provide or sell hedge funds as retail products. Nor was there evidence of significant demand from retail investors."
"However, we will be keeping the regulatory status of presently unregulated schemes under review and will be discussing with market participants and other interested parties the possibility of allowing a broader range of funds to be brought into the regime for retail investment products. The ongoing Listing Review and forthcoming review of Collective Investment Schemes may have implications for Hedge Funds."
Regulation of Hedge Fund Managers
The FSA regulates hedge fund managers in the UK but does not regulate the funds themselves. Respondents to the Discussion Paper did not think there was a need to make changes to the current regulatory regime. The FSA will nevertheless undertake some thematic work on the adequacy of systems and controls in hedge fund managers.
Gay Huey Evans commented: "We do not and cannot regulate the hedge funds themselves or set standards for them to achieve. However, all firms based in London, including the hedge fund managers, must take reasonable care to maintain systems and controls appropriate to their business. Hedge fund managers should be properly qualified and controlled when undertaking investment activities for their client fund. Any hedge fund manager in breach of these standards would be in breach of the rules."
