Hedgies Heart Singapore

July 29, 2010
By

Singapore is sometimes referred to as “the Switzerland of Asia.”

That’s a pretty good tagline to have, especially given how the original Switzerland is faltering.

In the aftermath of the global financial crisis, the regulatory outlook for small hedgies is not so hot. Europe is preparing draconian new laws to rein in “alternative investment fund managers” — as if they were the ones to blame, rather than heavily regulated banks run amok — and the U.S. is leaning towards forced SEC registration for hedge funds with $100-million-plus in AUM.

With Europe and the U.S. taking an increasingly hostile attitude towards hedge fund regulation and private client wealth — and even Hong Kong heavy on the red tape — Singapore sees opportunity:

Singapore is vying with Hong Kong for a slice of the global $1.7 trillion hedge-fund industry as the region’s growth leads the world. Singapore has made it easier for hedge funds to set up shop on the island than in other Asian cities such as Hong Kong, where hedge-fund managers face the same licensing requirements as mutual-fund managers.

After consulting the industry since September, Singapore’s central bank proposed in April that managers with less than S$250 million ($183 million) and serving not more than 30 qualified investors will be able to choose not to be licensed by submitting a “notification” to the MAS. They and their bigger licensed counterparts will need to maintain a minimum base capital of S$250,000 and have at least two directors….

…“Singapore has been as sensible and forward thinking as they can be about this,” said Peregrine Cust, founder of Prana Capital, which moved its investment team to Singapore from London in April. “It’s a very high-margin business, it brings lots of highly paid professionals into the local economy. It’s not going to take them that long to take this industry to critical mass.”…

- Bloomberg, Singapore’s New Hedge-Fund Regulation Puts City ‘Back on Map’

Just another example of how complacency breeds stagnation and decay… while a commitment to free market ideals creates opportunity.

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