Regulated under the current investment fund framework, hedge funds will have to make some “necessary adaptations”, said SGX. Among other things, hedge funds must have a minimum asset size of at least S$20 million or $20 million for Singapore and foreign currency-denominated funds respectively. Hedge fund managers must also have an independent risk management function and a principal with at least five years of investment management experience.
Under the terms of the listing rules, hedge funds must also declare the net asset value per unit as early as possible, and no later than seven days, after the end of every month. Hedge funds will also be required to announce any changes to their operations such as change in investment manager, independent auditor, custodian and administrator.
Paul Smith, global head of HSBC’s alternative fund services, said: “It’s high time that Asian managers had other options closer to home than Dublin and Cayman. This move by the SGX should be warmly welcomed as part of a concerted effort to help develop the hedge fund industry in the region.”
HSBC said much of the interest in investing in hedge funds is from institutions that do not have a mandate to do so. Listing these hedge funds will ease their allocation decisions, as some institutions are not permitted to invest in unlisted assets.
The listing of hedge funds will be faster than for conventional funds, said SGX, but there will be no trading in their units on the exchange – instead, issue and redemption will be handled over-the-counter.