Hedgeline
WELCOME to HEDGELINE - a publication dedicated exclusively to hedge fund regulation, each month we will provide a summary of the major legal and regulatory developments in hedge fund regulation, both in Europe and key offshore jurisdictions. For those who want to read in more depth, we have also provided links to all relevant materials currently available.
In this month’s update:
- U.K. hedge funds face greater disclosure under new CFD rules
- Jersey to launch unregulated funds regime in 2008
- Hedge funds poised for sub-prime litigation
U.K. hedge funds face greater disclosure under new CFD rules
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- FSA calls for greater disclosure of Contracts For Difference (CFDs)
- FSA proposes either three percent or five percent disclosure thresholds
- hedge funds no longer able to covertly acquire large shareholdings
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The U.K. Financial Services Authority (FSA) has called for greater disclosure of shares held through derivatives such as Contracts For Difference (CFDs). CFDs are widely used by hedge funds as it allows them to gain exposure to stock at low cost - typically five to ten percent of the value of the underlying share. CFDs also enable investors to go short, avoid paying stamp duty (0.5 percent of a transaction), and maintain secrecy (very few jurisdictions require disclosure of purely economic interests). According to the FSA, 30 percent of all equity trading in the UK is “in some way” driven by CFD transactions. More...
Jersey to launch unregulated funds regime in 2008
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- new regime offers ‘simplicity, certainty and speed’ when launching funds
- Jersey seeking to become leading European offshore domicile
- no local audit required under unregulated regime
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Aiming to become the European ‘jurisdiction of choice’ for the hedge fund sector, Jersey plans to launch a new Unregulated Funds Regime early next year. Funds that fall within the new regime, which includes two categories - the Unregulated Eligible Investor Category (UEIC) and the Unregulated Exchange Traded Category (UETC), will not be approved or authorised by the Island’s financial regulator, the Jersey Financial Services Commission (JFSC). More...
Hedge funds poised for sub-prime litigation
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- hedge funds may turn to litigation to recoup CDO losses
- more hedge funds may come under fire from investors
- hedge funds now investing in third-party lawsuits
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As the true extent of U.S. sub-prime losses becomes known, total losses are now estimated at more than US $400 billion - many anticipate hedge funds will be resorting to litigation to try and recoup losses. According to some estimates, hedge funds have purchased nearly 50 percent of all CDOs (collateralised debt obligations); the structures used by many underwriters to aggregate U.S. sub-prime housing loans, many of which are now worthless. More...
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Hedgeline August
Hedgeline September
Hedgeline October
Hedgeline November