Industry officials are hopeful the Committee of European Securities Regulators may confirm hedge-fund linked products can be used in a retail fund wrapper. The regulatory group held an open hearing two weeks ago to discuss allowing hedge fund indices in cross-border retail funds under a directive known as UCITS III, the officials said, and the CESR's response to arguments in favor of these funds was broadly positive, they added. However, there was no explicit go-ahead for the deals.
Several funds linked to hedge fund indices were authorized by regulators in the U.K. and Ireland last year, but some fund structurers put plans on hold after CESR published a consultation paper criticizing the funds (DW, 4/15). One fund-linked official present at the hearing said it looks like CESR will turn around the opinion it gave in the initial consultation paper. The hearing was part of a consultation period, which ends June 10. Victoria Powell, spokeswoman for CESR, declined comment on discussion at the hearing, noting CESR expects to publish a response to the consultation at the end of the summer.
