HK regulator to lure funds, raise salaries

By Jeffrey Hodgson

HONG KONG (Reuters) - Hong Kong's Securities and Futures Commission (SFC) is trying to lure more hedge fund managers, and it's raising salaries to prevent staff from leaving for the industry it regulates.

The regulator is trying to process applications from aspiring hedge fund managers as quickly as it "sensibly" can, but current quality requirements must be maintained, the regulator's chief executive, Martin Wheatley, told the Reuters Wealth Management Summit.

"We try to be effective in our approach. But what we won't do is compromise those standards, reduce those standards to the lowest common denominator just to try to win short-term business," Wheatley said.

"We're comfortable that our approach is right and that Hong Kong is attractive enough that people will want to come and set up here and go through our scrutiny process."

Hong Kong was home to more hedge fund assets than any other Asian city at the end of last year, with $12.1 billion managed from the territory, compared with $5.1 billion in Singapore, according to research firm Eurekahedge.

But managers at a hedge fund conference in Hong Kong last month said Singapore's appeal as a home base relative to Hong Kong has grown in the past two years. They found Singapore's regulatory regime faster and easier to deal with.

Wheatley said hedge fund applications were coming in at a higher-than-normal rate, but the regulator aims to turn around applications within 15 weeks and give approval in principle much sooner.

Like many private sector financial firms, the regulator has been hit with high turnover as staff leave for higher-paying jobs elsewhere, he said. Wheatley said he will try to address the problem when the regulator meets Hong Kong legislators in 2007 to set its budget.  Continued...