Switzerland is preparing sweeping new rules for its traditionally freewheeling hedge fund industry, in an overhaul that has unsettled money managers who departed London for the promise of an easier regulatory regime in the alpine country.

The Swiss government has drafted amendments to laws that will make the country -- once a byword for "light-touch" oversight of asset management -- into one of the most exacting jurisdictions in the world to run a hedge fund.


In a spate of heavily attended breakfasts and luncheons at luxury Zurich and Geneva hotels this month, hedge fund managers and private bankers have sought to get to grips with the potential scope of the proposed new laws, which have not yet been translated into English.

The regulations -- which have been proposed by the Federal Council and must now work their way through the Swiss parliament -- are intended to bring Switzerland into line with the European Union's own controversial new hedge fund regulations, but also to surpass them in key areas with a so-called "Swiss finish".


Jiri Krol, director of government and regulatory affairs for AIMA, the hedge fund industry's lobby group, said: "You are moving from zero regulation to a lot of regulation in one fell swoop. The potential shock could be big. Given the amount of global regulatory change at the moment I'm not sure people are aware of this, especially outside of Switzerland."

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