Fund-linked structurers and marketers are gearing up for the opening of one of Europe's largest structured products markets to onshore hedge funds. Spain is set to allow authorized onshore fund vehicles to use a greater range of investment tools, such as using derivatives as investments rather than efficient portfolio management, following a regulatory overhaul of its collective investment schemes. Officials at firms including Barclays Capital and UBS say they are already preparing to offer capital-protected investment products and leveraged exposure to the authorized funds.
One sales official said the move follows similar regulatory changes in Germany, but the Spanish market--along with the Italian--has a reputation for buying into complex structured investment products and it has proved a lucrative region for derivative houses. Armando Albarrán, partner with Freshfields Bruckhaus Deringer in Madrid, said minimum investment in the funds looks set to be fixed at EUR50,000 and there will likely be marketing restrictions to make sure the funds and related products are targeted at sophisiticated investors. An official close to the regulatory process said the changes are expected to become law in October, and will allow hedge funds onshore, providing they meet certain requirements, such as providing six-monthly liquidity.
