Asian hedge funds 'at risk from Dodd-Frank law'

24 February 2011

Hedge funds in Asia could find their potential significantly restricted by financial regulations approved by lawmakers in the US and due to come into force this year, it has been suggested.

Bloomberg reports that funds in the region are likely to face higher costs incurred by increased compliance requirements from the Securities and Exchanges Commission (SEC), with smaller firms at particular risk.

Funds which manage over $25 million for 15 or more American-based clients will have to register with the SEC by July 21st 2011, as well as keeping the financial industry watchdog up to speed with trading positions and asset values thereafter.

"Asian hedge funds will not be able to avoid increased regulatory reforms from overseas," said Citigroup's Andrew Hill. "Encroaching regulatory globalization ... will undoubtedly increase the fixed costs of doing business in this industry."

Earlier in the week, Citi's head of global prime finance Nick Roe told the news provider that a lack of institutional investment was also dampening the prospects of start-up funds.

By Asim Shah

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