ASIC Promises Hedge Fund Compliance Rules In Early '12

Dec 13 2011 | 10:46am ET

The Australian Securities and Investment Commission will reveal its rules for hedge fund disclosure early next year, reports the Investor Daily.

ASIC released a consultation paper on the subject in February 2011.

Kim Ivey, president of the Australian arm of the Alternative Investment Management Association, said that their collaborative work with ASIC had resulted in an improvement in understanding "what the other party is looking for" on both sides.

"We have been working with them to ensure that that is a prudent piece of legislation, in a way that the industry understands why it's been installed and what benefit it [has] for investors," Ivey said.

Ivey said he wasn't surprised at the lack of knowledge surrounding hedge fund illiquidity as it's a complex issue.

"Daily liquidity is a dangerous issue for Australia. There has been criticism from inside the tent that some very large hedge fund managers perhaps didn't explain in worst case scenarios [what] things could occur.

"The onus should be on the hedge fund manager to make sure their investors understand what they are investing in [although] there's been education on both sides."

Ivey told Investor Daily that fund managers are now ensuring their liquidity terms match their portfolio liquidity:

"That's an issue that we're discussing with ASIC to ensure that there is proper disclosure around it," he said.

Australia is home to $50 billion in hedge funds. Ivey said fund managers report interest in fund of hedge funds and long/short equity strategies.

"[This] leads me to believe people are thinking ahead of the curve," he said.

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