Asian hedge funds concerned by EU reforms

New hedge fund rules set to pass in Europe this week could create regulatory issues for firms based in Asia.

This is the concern among operators based in Singapore and Hong Kong, as the Alternative Investment Fund Managers Directive looks set to apply to all companies with EU-based clients, Reuters reports.

Hedge funds will therefore have to comply with the directive's strict new limits on executive pay and leverage, regardless of where they are domiciled.

Lawyer Han Ming Ho, who chairs Singapore's Alternative Investment Management Association, said the regulatory overhaul could create "multiple challenges" for Asia's hedge fund and private equity firms.

He told the news agency: "They will effectively have to follow EU law and an EU pay code in their respective local jurisdictions."

Peter Douglas, principal of the Singapore-based hedge fund consultancy GFIA, added that larger fund managers are "very concerned" about the potential cost of complying with the new rules.

The directive is due to go before the European parliament on Thursday (November 11th). If it succeeds, EU member states will be required to implement the measures by 2013.