Are the current regulations favourable for starting hedge funds in Korea?
The regulations are not conducive to establishing an asset management firm, let alone a hedge fund management firm. In stark contrast to the competition that we see taking place between Hong Kong and Singapore to attract managers, Korean law seeks to discourage the setting up of “boutique” or smaller asset management firms by requiring that they be significantly capitalised. To run a commingled fund I believe you need to put up the Korean won equivalent of US$10 million. Consequently, the few Korea-focused hedge funds of which I’m aware with a local presence merely have a research office, though even if they had a more meaningful presence there isn’t an adequate infrastructure of service providers and lenders to accommodate them. One example is shorting, which is difficult to execute domestically. I believe that only offshore firms and domestic prop desks are allowed to short through the Korea Securities Depository, and that the borrowing limit had been US$10 million per account, thoug
