Singapore's hedge fund regulation review has teeth
By Paul Betts, Kevin Brown and Andrew Hill
Published: April 30 2010 03:00 | Last updated: April 30 2010 03:00
When you are in charge of the garden, it pays to use a weedkiller that doesn't kill the delicate plants.
That seems to be pretty much what the Monetary Authority of Singapore, the city state's central bank, has achieved with its consultation paper on fund management, published this week. Hedge fund managers barely raised an eyebrow when news of a review leaked in the Financial Times in September, betting that the exercise would make little real difference to the regulatory regime.
That turned out to be correct. Indeed the only real surprise in the paper is that professional indemnity insurance cover will not be mandatory for hedge funds running less than S$250m ($183m) in assets. The review is not toothless. Funds with fewer than 30 financially sophisticated investors and less than S$250m in assets remain free of continuous regulation, but will have to keep qualified staff in Singapore, comply with business conduct rules and maintain a minimum capital base. There are tougher rules for bigger funds. It looks likely, though, to have pulled off the clever trick of increasing supervision and minimising opportunities for regulatory arbitrage without dramatically increasing the costs of compliance.
Nothing is settled until the formal consultation ends next month and legislation has been enacted. But these proposals look like keeping the hedgies happy and the garden growing.