Fri, Mar 27, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Asia Pacific Intelligence

Japan expects more hedge funds to put up shop in Tokyo

Tuesday, October 01, 2013

Precy Dumlao, Opalesque Asia: Japan's market regulator, the Financial Services Agency, is hoping Tokyo will attract more foreign hedge funds to put up shop in the country since the agency relaxed its rules to open investment management business there.

According to a report by Financial News, data from Eurekahedge indicated that there are 55 locally-registered hedge funds with offices in Japan, but only 20 are domiciled in the country. But despite the relaxation of the rules, there are still significant challenges that make the entry of foreign hedge funds to Japan difficult, the report said.

The report quoted Kazuho Suzuki, chief operating officer and co-founder of global macro specialist Edgebell as saying, "Prior to the changes, the regulatory hurdles for institutional hedge funds were very high. Before opening for business you had to hire at least seven people as investment managers and then wait a year before getting a license - while paying those seven people. You also needed ¥50 million ($50,000) of capital."

The changes were introduced by the FSA in April 2012 specifically to attract institutional investors by easing the requirements for capital the number of hired employees. But the new rule also doubled the capital to ¥10 million ($100,000) but reduced the number of employees to two full-time members and a part-time auditor.

Industry observers say that despite the easing of the hedge funds rule, Japan has not yet seen an influx of hedge funds. Hedge Fund Japan, a forum for hedge funds, investors and service providers in the country said they expect the number of hedge funds putting up office in the country to rise in the coming months.

Meanwhile, hedge fund guru Ray Dalio said two weeks ago, that the Japanese economy would need another big round of stimulus to boost its growth even as some emerging markets are experiencing a downward spiral.

Dalio, who heads one of the world's biggest hedge fund, the $150bn Bridgewater Associates, made the statement in a speech before the Japan Society held in midtown Manhattan. He cited that the Bank of Japan injected about $1.4tln into its flagging economy in April this year in an effort to end two decades of stagnation. The monetary easing, coupled with reflationary, pro-growth policies championed by Japan's Prime Minister Shinzo Abe, sent stocks rallying and the yen tumbling.

Also last week, Japan introduced amendments to the rules on short sales. The FSA said the changes would take effect on November 5 this year.

Currently, the rules and regulations governing short sales in Japan are only applicable to trades made on exchanges. However, as a result of the amendments, the scope of the existing rules will be expanded and short sales made on Proprietary Trading Systems will also be subject to the existing short sale regulations. Specifically, short sales made on a PTS will be subject to the following rules: the prohibition of "naked" short selling; "short sale" flagging requirements of the trader (i.e. identifying whether the sale is long or short to the broker); the Uptick Rule; Short Sale Balance Ratio reporting and disclosure requirements and the prohibition on the use of shares acquired through a public offering to close out short positions created through short sales made during the offering period.

 
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
Asia Pacific Intelligence
Asia Pacific Intelligence
Asia Pacific Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. Other Voices: The role of diversification in CTA portfolios[more]

    2014 brought a resurgence of managed futures strategies, or CTAs, which performed very well as a whole, outperforming all other hedge fund strategies. However, a closer look reveals that there was a wide range of performance, or return dispersion, across managers. The bottom line? Not all CTAs

  4. Neuberger Berman unit buys 20% stake in activist hedge fund Jana Partners for $2bn[more]

    Komfie Manalo, Opalesque Asia: Neuberger Berman’s unit Dyal Capital Partners bought a 20% stake in activist hedge fund firm Jana Partners worth $2bn, WSJ.com reports. The deal comes as activi

  5. Hedge fund launches fall again, $1bn funds found to outperform even smaller hedge funds[more]

    Komfie Manalo, Opalesque Asia: The number of new hedge fund launches fell again in 2014, the third consecutive year of decline, while fund liquidations saw their first drop since 2010, according to the latest HFR Market Microstructure Industry Report released by industry data provider HFR. Acc

banner