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Regulation: Hong Kong streamlines hedge fund licensing

The Securities and Futures Commission of Hong Kong announced in June that it would be "streamlining and simplifying" the licensing process for hedge fund managers with immediate effect. Alexa Lam, the SFC’s executive director of intermediaries and investment products, said: "These initiatives will make the licensing process easier for fund managers and more particularly for overseas hedge fund managers. They are not intended to lower our regulatory requirements because we recognize that these contribute to Hong Kong’s reputation among investors as being a jurisdiction in which appropriate standards are insisted upon among its market participants."

In particular, the changes will include speeding up the licensing process for some US- and UK-registered or licensed hedge fund managers. The industry is welcoming the move with open arms. When the SEC in the US tried to enforce registration for overseas hedge funds selling to US investors, it was heavily criticized. Managers and industry watchdogs were disappointed that registration with their domestic regulators was not seen as sufficient. The Hong Kong SFC is being applauded for its international diplomacy in easing entry for funds registered with the UK Financial Services Authority or with the SEC.

The move should also enhance Hong Kong’s position as Asia’s hedge fund capital.

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