November 16, 2006

Listed Funds Head for Amsterdam

-- By Pushpa Sathish, Staff Writer

The fear that the tightening of the regulation noose around hedge funds’ neck will push them overseas is being realized in Europe.  London’s loss has turned out to be Amsterdam’s gain – with the Financial Services Authority banning single-strategy hedge funds from being listed in London, at least two large funds have been floated in Amsterdam.

Following Boussard & Gavaudan, the hedge fund launched by former Goldman Sachs employees, Marshall Wace has also chosen to set up base in Amsterdam. The fund made news recently when it set a target of €1 billion, which, if it attains, will give it the billing of the world’s biggest listed hedge fund. Another good thing going for Marshall Wace is the appointment of Sir Andrew Large, former Deputy Governor of the Bank of England and chairman of the FSA’s predecessor, the Securities and Investment Board.

Marshall Wace makes its money using the controversial “alpha capture” method, where investment bankers and brokers are compensated for ideas that do well. While a section of regulators feel that this reward system may lead to insider trading, the FSA has approved this technique.

The hedge fund has been extremely successful, and is worth €5.9 billion currently. Sir Andrew has been roped in with a one-time fee of £250,000 and an annual director’s fee of £70,000.

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