Swiss Plan EU-Style Hedge Fund Rules

Apr 17 2012 | 1:48pm ET

British hedge fund managers who have fled to Switzerland are in for a rude surprise.

The country that practically invented the terms "off-shore" and "light-touch" is preparing to have a much heavier hand when it comes to its alternative investment funds. If formerly U.K.-based hedge fund managers thought they could skirt tough new European Union regulations—they should think again. Switzerland plans to match them.

The country's Finance Ministry said its parliament will begin debating new rules to bring Switzerland into line with impending EU rules—Switzerland is not a member of the 27-nation bloc—this year, and that the new rules will take effect next year.

Why the change? Switzerland fears that its growing funds industry will be shut out of EU markets when the bloc's new Alternative Investment Fund Managers Directive takes effect. Those regulations could block any foreign manager whose local jurisdiction doesn't meet EU regulatory standards.

For Switzerland, that means the number of regulated managers could grow more than six-fold, to almost 600, one Swiss lawyer told Bloomberg News.

It's unclear what effect Switzerland's decision will have on its hedge fund industry. Many of the British funds and managers who relocated to the country did so more to avoid new, higher British taxes than impending EU rules. And if they move to remaining light-touch jurisdictions, such as Monaco or the Channel Islands, they could find themselves locked out of the EU.

The change may have a bigger effect on the Swiss themselves: Switzerland, despite having a population smaller than New York City, is one of the wealthiest countries in the world and is home to a large number of hedge fund investors, who, paradoxically, could be shut out of Switzerland if they fail to meet the stringent new requirements.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.