November 2008, the U.S. top five hedge fund managers to Washington to defend their business practices. With the credit crunch, legislators asked the secret of this famous industry supervision. Camp Kenneth Griffin Investment Group not be intimidated. When I went to Canary Wharf, the derivatives market to see thousands of jobs, my heart is broken, these jobs that are in the United States.
The implication is obvious. If Congress against U.S. hedge funds may be transferred at any battlefield.
However, the transfer to London is not necessarily a better choice. Proposed European regulations more stringent, so that foreign funds are more difficult to conduct business in Europe, the cost is also higher, and payments, risk, and borrowers have done restriction.
Then how about it? According to Griffin s logic, the Fund has not transferred to Hong Kong or Singapore may be the more favorable tax rates, to avoid over regulation has also been the country? Asian economic growth is attractive, but the hedge fund industry experts believe that the mass transfer from the United States is unlikely. This is because some of the larger hedge funds may indeed benefit from the financial reform bill, even though their staff complain about tax increases. In contrast, smaller funds will face more tough choices.
The new rules are not hedge funds appear out of thin air. They will be major and potential new banking rules simultaneously. According to the final version of the Finance Act, hedge funds could prove to be the winner. First, if government restrictions on trading, they can enjoy the benefits of the loss of talent from the bank. If the banks want the separation of the derivatives business, the Fund may also take over these businesses.
Of industry leaders, in government departments, not a big problem up. U.S. Securities and Exchange Commission had requested in 2006, hedge fund registration, and later overturned by a federal appeals court. However, many large hedge funds have not deregistered. In fact, proved in the United States Securities and Exchange Commission registration is a good marketing tool it allows investors to feel assured that help to attract large amounts of capital. Transferred to another country is also unfavorable for corporate public relations that often prompt investors to shift funds suspected of hiding something.
However, by increasing the start up costs (funds may need to have a Chief Ombudsman and an independent auditor), mandatory registration may harm smaller funds. Another may reduce its regulatory reform is to improve the vitality of qualified investors to become the lowest level of assets to reduce the size of the smaller sources of funds.
These pressures may lead to merger wave. The recent London based hedge fund GLG Partners Group acquired Jinman Shi seems to indicate that funds are sides of the Atlantic prepare to meet regulatory and not necessarily transfer to any place.
The fact that many funds can be used in the reorganization of the basis for this assertion. More and more European hedge fund in a collective investment in transferable securities under the plan to control the operation of the investment plan to be on the transparency and liquidity constraints similar to mutual funds, but allow flexibility in trading and hedge fund leverage. An industry source said, more and more American Funds may use this model in Europe.
In the long run, the new fund manager will definitely try to build low cost company areas. U.S. policymakers have shown that they may be transferred to overseas tax havens but doing business in the United States Exchange Fund punishment. Therefore, the market will have a lot of idle capital can be used as seed money. As a result of the new control, this situation has emerged, and it is likely to continue.
But London and New York seem likely to continue as the current financial centers. Connecticut hedge fund under the Association s statement of John Bruce Rogers, the current regulation of our bigger problem is the unity. If the U.S. and Europe can not build a unified regulatory system, the Fund will be able to use cross border differences in regulatory arbitrage in certain markets.
In addition, regulators on both sides of the Atlantic need to understand how hedge funds operate, says Sebastian Mallaby, his book, a book on hedge funds, wealthy to be published. If the government found no financial details of the skill and experience, or do not know what the size of the hedge fund impact on the system, then the supplementary regulations is empty.
After all, Mallaby pointed out in the Bernard Madoff large hedge fund Ponzi scheme for years before exposing it in the United States Securities and Exchange Commission registered.
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