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The report examines the existing regulations on funds of hedge funds or proposed regulations in various member jurisdictions, and identifies present issues of concern to regulators.
The Report shows that in many cases, there is a real convergence of the national regulations but also of the national practices. Although there is no common definition of the fund of hedge funds concept worldwide, the consultation reflects that most jurisdictions do regulate or authorize funds of hedge funds, and that such regulation is for the most part generally based on the common regime applicable to traditional collective investment schemes even if, in some cases, such provisions are complemented by specific rules.
The convergence of the national rules on funds of hedge funds may in particular be acknowledged with regard to the disclosure made to investors. There is also a true convergence of national rules in respect of the on-going disclosure owed to investors, typically in relation to the publication of the financial statements and of the net asset value.
Convergence may also be found in respect of the selection of the underlying hedge funds and in respect of the offer of funds of hedge funds to retail investors. It also results from the report that in the vast majority of jurisdictions, the funds of hedge funds’ managers/advisers are subject to the same rules as those imposed upon traditional funds’ managers.
Finally, if there is no convergence of the national rules in a few areas (such as, for instance the means to deal with the funds of hedge funds’ liquidity), the different regulators do nonetheless share the same concerns.