Thursday, March 09, 2006

Hedge Funds To List on Singapore Exchange???
You Better Be Joking About This

The following was reported in The Straits Times (Singapore) 9/3/2006: "Hedge funds are the hottest investment around these days and they could be listed on the Singapore Exchange (SGX) - but not before the public gives its two cents' worth. The SGX wants public feedback on the proposal to allow the funds to list but not be traded - a move that would make Singapore the first market in Asia to have such a listing framework. Industry watchers are in favour, saying it will enable hedge funds to draw investments from institutions, particularly European pension funds, that have internal rules barring them from putting money into unlisted securities. Allowing the listings will also fill a 'huge vacuum' for an Asian centre, as hedge funds have to head to exchanges in Dublin and Luxembourg, which are 'near administration capacity and in the wrong time zone for Asian funds', said hedge fund consultant Peter Douglas. 'This is potentially a huge move that could boost Singapore's standing as a wealth management hub,' he added. The director of advisory services at hedge fund research firm Eurekahedge, Mr Nigel Poh, agreed: 'Together with the Budget measures to boost the investment management industry, this move creates a favourable environment to attract more hedge funds to set up shop here.' It could also provide a positive knock-on effect for law firms and fund administrators, experts say. Hong Kong, which is Singapore's closest rival as an Asian base for hedge funds, does not have a listing framework. The SGX paper lays out a number of criteria for hedge funds seeking a listing: They must be recognised or authorised under the Securities and Futures Act, offer units only to institutions or wealthy investors and have at least S$20 million in assets. They must have at least one key executive with a minimum of five years of investment management experience and fulfil basic public disclosure requirements. These include publishing each month the per-unit value of their portfolios less liabilities and six-monthly financial results. But the funds would be exempted from disclosing in their annual reports their list of investments and how they fared. 'A robust framework with necessary safeguards is needed for the listing of hedge funds,' said SGX. 'As hedge funds have different characteristics and risk structures compared to a typical investment fund, it is proposed that the listing of hedge funds be regulated within the existing framework for investment funds with necessary adaptations and amendments.' The deadline for feedback submission is March 28. The paper can be viewed at "

My take:

a) You are supposed to list them but not trade them - so we have a listed fund but no tradeable prices? This is supposed to allow institutions to invest, particularly those who can only invest in listed vehicles. Its a silly way to attract more investors. The problem lies with those archaic investors, they are the old European money, they should just go and change their charter in light of modern developments in international finance. You don't bend over backwards for them. Even as I am speaking about this, a lot of hedge funds have already listed their funds in Dublin and Luxembor already. But if you have already unbuckled your pants for others to do stuff to your behind, I cannot stop you, can I?!!

b) The nature of a hedge fund may usually have a short life span. If a fund posted negative returns for a couple of years, I think its goodbye everyone. Listing them would only add to the already onerous fee structure for everyone. It just vets for these additional information - that the fund has someone with at 5 years investing experience; post a monthly NAV/unit price; post a 6-monthly results - my gawd, almost all hedge funds investors would GET THAT kind of information already, twerps!!! So what is new!!!

c) You have invented the wheel, then there is this group of very wealthy merchants who want you to redesign the wheel into a square instead - because the roads in the town where they live is made out of stairs, up and down, up and down, but all stairs' steps. That's what we are facing here, don't bend over backwards for these archaic funds. There will always be funds if you are good. Next they will ask you to list some islands cos they can't buy them unless these small independent islands are listed.

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