On October 6, 2008, the International Organization of Securities Commissions (IOSCO) published for public consultation a paper entitled Proposed Elements of International Regulatory Standards on Funds of Hedge Funds Related Issues Based on Best Market Practices, which sets forth a series of proposals designed to address regulatory issues concerning retail investor involvement in funds of hedge funds. This paper is aimed at funds of hedge funds' managers to address regulatory issues of investor protection in light of the increased involvement of retail investors in hedge funds through funds of hedge funds.

These proposals were developed following IOSCO's Report on Funds of Hedge Funds, which was published in June 2008 and identified issues in the following two areas:

  • the methods by which funds of hedge funds' managers deal with liquidity risk; and
  • the due diligence processes undertaken by managers prior to and during the life of an investment.

Québec's Autorité des marchés financiers (AMF) is a long-standing member of IOSCO and participates actively on IOSCO's committees. The AMF encourages the securities industry to comment on this paper. The deadline for submitting comments on this consultation paper is January 5, 2009.

This paper can also be downloaded from IOSCO's website This link will open in a new window.