The European Union's new UCITS-style hedge-fund registration regime isn't garnering many takers.
The new system, set up as part of the bloc's Alternative Investment Fund Managers Directive, has won only a handful of registrants. Only 11 have registered in the U.K., and only three each in Ireland and Luxembourg, major European hedge-fund domiciles, the Financial Times reports.
The framework was designed to provide a UCITS-style regime to allow hedge funds to come into compliance with the new law. But the costs and difficulty of registration has left many hedge funds, especially those based in the U.S., wary of the process, making it likely that hedge funds will continue to use private placements for as long as they can—in the U.K., until at least 2018.
"The headache and cost implications mean you have to be very confident in your ability to access funds in Europe," Akin Gump Strauss Hauer & Feld partner Ian Meade told the FT.
The experience of Marketfield, a U.S. liquid alternatives firm, helps explain the reticence.
Registering "is like major dental reconstruction," CEO Michael Shaoul told the FT. "It's not going to be pleasant. I would advise anyone going to take this step to budget considerable resources." Shaoul said he was required to substantiate his résumé and dig up his college diploma, among other difficulties.