Wednesday, 30 July 2014
Last updated 4 hours ago
Jul 12 2012 | 10:05am ET
China is taking the first steps towards allowing its vast and growing domestic wealth to flow into foreign hedge funds.
The country is set to announce a program that would allow its richest citizens to invest in some of the world's largest hedge funds. The plan, called the Qualified Domestic Limited Partner program, has not been formally unveiled and will remain extremely restrictive, but marks another first for the country as it begins to allow more hedge fund activity on its shores.
Hedge funds who want a piece of China's vast personal savings will have to apply for a license in Shanghai, and only the largest hedge funds, those with at least US$10 billion in assets, will be welcome, the Financial Times reports. What's more, China will only allow about US$5 billion to be raised by the foreign hedge funds initially, and all investments will need to be approved by the State Administration of Foreign Exchange.
China will allow some measure of free enterprise: Those hedge funds that win a coveted license will be allowed to fight amongst themselves for as large a slice of the available capital as they can garner, rather than have the money doled out in a more equitable fashion.
China has recently begun relaxing regulations that once all-but-barred hedge funds. In 2010, the country got its first genuine hedge fund, a domestic product. And the country is considering looser rules for foreign investors who want to invest in its stock markets.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…