Proposal may increase insurance costs for hedge fund participants

Proposed National Instrument 31-103 – which outlines registration requirements for hedge fund participants – may significantly increase insurance costs for firms participating in hedge funds, according to a paper authored by Ronald Kosonic of Borden Ladner Gervais.

Posted on Borden Ladner’s Web site, Kosonic’s paper says minimum insurance requirements for firms with significant hedge fund assets or assets under management could run as high as $25 million in some cases.

“We expect that the new capital and insurance requirements of proposed NI 31-103 will have a significant impact on hedge fund industry participants,” Kosonic said in his paper.

NI 31-103 is principally designed to put in place a revised, nationally harmonized and streamlined hedge fund registration regime for firms and individuals.