Commenting on whether it would be possible for hedge funds to operate ‘on-shore’ in Denmark after the proposed rules become effective, Vestergaard said, "In practice it will not be possible."
Other Nordic countries like Sweden and Finland have seen a proliferation of hedge funds during the past three years, with about 38 funds managing assets in excess of $4 billion now domiciled in the two countries. Hedge fund participants were hoping changes in Danish regulations would allow the ‘on shore’ market to develop in that country.
The Danish FSA is currently drafting its new investment trust proposals, which it will submit to national parliament by the end of the year. The European Union (EU) regulations covering investment trusts prevent these entities from using gearing. But these rules can be over-ridden by national regulators.