The Regulation of Hedge Funds: PwC report into the regulation of hedge fund managers and products. Part 2

Graham Phillips, PricewaterhouseCoopers, London

Most hedge fund regulation is based on the premise of restricting the sale of interests in hedge funds to limited numbers of qualified, knowledgeable investors. As more investors clamour for access to hedge funds, particularly in current stock market conditions, and regulators develop a deeper understanding of the hedge fund industry, significant changes are taking place. The European hedge fund industry has grown rapidly to over US$84 billion in assets ¹ , yet this represents only about 15% of the global total of hedge fund assets. Certainly some of the US dominance of the hedge fund industry is attributable to a stable, yet flexible, regulatory environment that is conducive to managing and distributing hedge funds, and the economies of scale that result. In the second part of his article, Graham Philips of PricewaterhouseCoopers examines the regulation of European hedge fund managers and hedge fund products and reviews developments that could potentially affect the market over the coming years.