The Hedge Fund industry is often perceived as unregulated. It is actually not the case. In fact, since the onset of the financial crisis, major regulatory measures in the US and Europe have completely modified the industry landscape. AIFMD (Europe) and Dodd-Frank (US) have defined the basis for regulation of the Industry and have led to an unprecedented set of rules and costs for what was once a close to non-regulated industry. This has considerably impacted the costs of running a hedge fund. The average costs for implementing the most recent rules has been 700000$ for a small fund manager, 6m$ for medium-sized one and 14m$ for the largest. Hedge funds have spent 4bn$ meeting compliance costs associated with new regulations since 2008, equating to roughly a 10 percent increase in their annual operating costs. This sounds like large amounts but those investments will pay off from a competitive standpoint in the future.
The Hedge Fund industry is often perceived as unregulated. It is actually not the case. In fact, since the onset of the financial crisis, major regulatory measures in the US and Europe have completely modified the industry landscape. AIFMD (Europe) and Dodd-Frank (US) have defined the basis for regulation of the Industry and have led to an unprecedented set of rules and costs for what was once a close to non-regulated industry. This has considerably impacted the costs of running a hedge fund. The average costs for implementing the most recent rules has been 700000$ for a small fund manager, 6m$ for medium-sized one and 14m$ for the largest. Hedge funds have spent 4bn$ meeting compliance costs associated with new regulations since 2008, equating to roughly a 10 percent increase in their annual operating costs. This sounds like large amounts but those investments will pay off from a competitive standpoint in the future.