May 14, 2006

Regulation of Hedge Funds in Europe

In spite of the high risk, hedge funds have become the preferred destination for many investors. In fact policy makers are also aware of its potential. They have instituted national regulatory frameworks to regulate everything concerned with hedge funds.

As far as Europe is concerned, the investment environment is very complex, as various countries follow various approaches. This has led to the proliferation of many domestic-domiciled hedge funds.

Now if you are a hedge fund manager and want to promote funds in Europe, you have to understand the various complexities involved. Just knowing about the regulations of a single country won't be of much help. There are various marketing restrictions in place that you need to be aware of. This literally means that distribution would be possible only through private placements.

Hopefully, more regulatory changes are in the offing. At the same time, it would pay to initiate a dialogue with the European regulators so that whenever the changes are made they can be really beneficial to the industry.

Read an interesting report by PWC on hedge fund regulation in Europe here

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