Canada Hedge Funds Regulation

Canada Hedge Funds Regulation

Canada Hedge Funds Concerned over EU Regulations

Canadian hedge funds are concerned over the draft legislation in the European Union, fearing that the new legislation would put non-EU funds at a disadvantage.  The proposal places several requirements on hedge funds operating in the European Union and Canadian funds predict that they will lose out on capital to these more regulated funds.  
"This is going to de facto prevent you from getting investors from the EU," said Gary Ostoich, AIMA Canada chairman and president of hedge-fund firm Spartan Fund Management. Moreoever, he said, Canadian hedge funds that now have capital from the EU may have to shed those investors.
"This doesn't exactly give a level playing field," he said, and raises the question of whether Canada could institute reciprocal guidelines.

European investors are a particularly important source of capital for Canadian hedge funds, Ostoich noted, and in some cases can reach up to 50% of the fund's total capital. "European investors, when they look to source exposure to the resource side, look to Canada for expertise," he noted.
Restricting their marketing access to Europe could severely limit the opportunities now available to Canadian hedge funds, he said, and could choke off private-equity deals that would have incorporated European capital. Source

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