CSA Review Of Hedge Funds Identifies Areas For Further Study

As a result of their review of hedge funds in Canada, the Canadian Securities Administrators have concluded that the existing regulatory regime is generally adequate but have identified a number of areas for further study, including principal protected notes that provide exposure to underlying hedge funds and referral arrangements for hedge fund products.

On January 12, 2007 the Canadian Securities Administrators (CSA) published Staff Notice 81-316 Hedge Funds (Staff Notice). The Staff Notice reports on the CSA’s findings of its review of hedge funds in Canada. This update discusses the key findings of the CSA staff review.

The review was conducted from early 2005 through early 2006. It involved compliance reviews of hedge fund managers and advisers, disclosure reviews and industry consultations. Following the review, CSA staff concluded that "our regime contains an appropriate securities regulatory framework for hedge funds, but that certain areas within it