Guest research: South African Hedge Fund regulation

Our Research posts are about the latest academic research and this week we have a guest post:

SOUTH AFRICAN HEDGE FUND REGULATION – THE GOOD, THE BAD, AND SOME CONTROVERSIAL VIEWS

by Francois van Dyk (Unisa)

It seems as though South Africa is aiming to become one, if not the first jurisdiction to formally impose regulations on hedge funds, as the National Treasury and Financial Services Board (FSB) suddenly, but not surprisingly issued a proposed regulatory framework on 13 September 2012.

Although hedge funds are still considered to have no formal, universal definition, it generally refers to amongst others the following:

• A pooled investment vehicle which is organised privately and administered by professional investment managers.
• An investment instrument that provides different risk/return profiles compared to traditional shares and bond investments, thus they are by definition alternative.