Draft regulations for hedge funds welcomed

Draft regulations published yesterday by the National Treasury and the Financial Services Board (FSB) including hedge funds under the existing Collective Investment Schemes Control Act (CISCA) have been welcomed by Novare Investments.

Francois Cilliers, Chief Investment Officer at Novare Investments, an independent fund manager specialising in multi-manager and alternative investment solutions, commented: "Yesterday's announcement that the provisions of Cisca will be applicable to hedge funds is good news.

"This is the culmination of many years' hard work and open dialogue on the part of the Association for Savings and Investment South Africa (ASISA), together with the National Treasury and the FSB.

"Although hedge fund managers have long been regulated under the Financial Advisory and Intermediary Services (FAIS) Act, this will bring to a close a long period of uncertainty regarding the regulation of hedge fund products in South Africa.”

The final regulations will be realised in terms of the Collective Investment Schemes Control Act (Cisca) and the intention is to finalise these by mid-year depending on the nature of comments received before 23 May.

Eugene Visagie, Portfolio Manager at Novare Investments, said hedge funds as a strategy would become more mainstream and accessible, resulting in inflows from retail investors attracted by the reassurance of buying regulated products.

He said that due to its well established long-only collective investments industry, South African markets benefitted from sufficient size, depth and liquidity to support the efficient operation of hedge funds.

The draft regulations followed extensive input from industry participants, regulatory bodies and other interested parties.