“In 2012, South Africa, as a committed member of the G20, embarked on a process to enhance and expand the scope of regulation and oversight over hedge funds, following the global financial crisis in 2008,” said the Financial Services Board (FSB) and National Treasury in a joint statement.
“This process culminated in the release for public comment, on 13 September 2012, of the Treasury and FSB proposed framework for regulating hedge funds in South Africa.”
As a result of the feedback from the public, the Treasury and FSB laid the foundation for these draft Regulations and, according to the Treasury and the FSB, industry participants and bodies were invited to provide input during the regulations drafting process as well.
The draft regulations have been enabled and empowered by the Collective Investment Schemes Control Act (CISCA) and have also been issued for public comment by the Registrar of Collective Investment Schemes.
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“The final regulations will be effected through the existing CISCA as a scheme declared by the minister of finance in terms of section 63 of CISCA. The declaration will also include those provisions of CISCA that will be applicable to hedge funds,” they said.
“The intention is to still finalise the regulations by the second quarter of this year. However, this will be dependent on the nature and extent of the comments received, which could necessitate the finalisation in the third quarter of 2014.”
Hedge funds are a collective investment scheme which use any strategy or takes any position which could result in the portfolio incurring losses greater than its aggregate market value at any point in time.