Korea mulls easing rules for hedge funds

Korea’s financial regulator is considering loosening regulations over private equity funds, a move that may open the gates to local hedge funds.

The country’s tight limits on short-selling leverage rates and types of assets allowed for investment have constrained local funds’ growth and investment targets.

“The Financial Services Commission is seeking to revise the capital market law by the end of this year to loosen up rules over leverage rates and help diversify investment assets,” said Cho In-kang, director general of the capital market bureau.

“A revised law will allow a wider scope for investment and more various investment techniques while providing a level playing field to domestic players versus overseas funds,” Cho said.

Currently, local private equity funds are ordered to maintain leverage rates below 400 percent of their assets, but the ceiling will be raised, he said.

Hedge funds are sums of money privately pooled using a wide range of investment techniques, including short-selling and leveraged buyouts, in search of risky but massive investment returns.

(From news reports)