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13-117MR ASIC to further improve hedge fund disclosure

Thursday 23 May 2013

ASIC will consider submissions from industry to refine the definition of ‘hedge fund’ due to concerns the current definition affected a number of funds that do not exhibit the same risks to investors as ‘true’ hedge funds.

In June 2012 ASIC released Class Order [CO 12/749] Relief from the Shorter PDS regime which excludes hedge funds from the shorter product disclosure statement (PDS) regime. [CO 12/749] was at the Minister’s request and is a temporary exclusion (until 22 June 2014) to allow the Government to develop a permanent solution. However, under the class order if an issuer had issued a shorter PDS for a hedge fund on or before 22 June 2012, it can continue to use the shorter PDS.

In September 2012 ASIC released disclosure benchmarks and principles for hedge funds to improve investor awareness of product risks (refer: 12-232MR). These were to be disclosed against in any PDS dated on or after 22 June 2013.

[CO 12/749] and Regulatory Guide 240 Hedge funds: Improving disclosure (RG 240) define a ‘hedge fund’ as a registered managed investment scheme that is:
  1. promoted as being a ‘hedge fund’, or
  2. exhibits two or more of the following characteristics of a hedge fund:
    • complexity of investment strategy or structure
    • use of debt
    • use of derivatives (subject to limited carve-outs)
    • use of short selling, or
    • has rights to charge a performance fee.

Following industry feedback, ASIC had decided to extend until 1 February 2014 the transitional relief to hedge fund issuers under [CO 12/749] that had previously issued a shorter PDS on or before 22 June 2012.

ASIC will also extend the start of RG 240 until 1 February 2014 to allow consideration of submissions and continue engagement with a number of issuers. A PDS issued after 22 June 2012 for a fund which satisfies the definition of hedge fund must issue a longer form PDS.

‘ASIC’s discussions with industry over this issue have been constructive. We are confident this extension best balances the need for ASIC to fully consider the submissions from industry and provide industry with sufficient time to adjust to any revised definition while ensuring investors are provided with the key information under RG 240 as soon as possible,’ ASIC Commissioner Greg Tanzer said.



There is no universally recognised definition of ‘hedge fund’. ASIC consulted twice on the definition in the context of seeking input on appropriate investor disclosure by hedge funds (refer: 11-31AD and 12-30MR). In developing the definition in RG 240 ASIC had regard to:

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