October 3, 2007

Dubai Financial Services Authority’s Proposed Hedge Fund Code of Practice

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On July 3, 2007, the Dubai Financial Services Authority (DFSA) issued Consultation Paper No. 50 seeking comment on the DFSA's Proposed Hedge Fund Code of Practice. The DFSA's proposed code of best practices utilizes a principles-based as opposed to a detailed and prescriptive approach. The DFSA adopted a principles-based approach to give hedge funds the flexibility to adapt its proposed best practices to their particular circumstances in light of changing market conditions. This Public Interest Comment (PIC) addresses the DFSA's query as to whether the hedge fund industry may prefer a more prescriptive approach to best practices. The PIC finds that the diverse and dynamic nature of the hedge fund industry is not well-suited for a prescriptive and detailed code of specific best practices. As the hedge fund industry evolves and grows, any detailed list of best practices is sure to become obsolete as the funds continue to adopt new investment strategies and other practices.