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New tool to police JSE hedge funds

Johannesburg - In a move designed to bring transparency to the unregulated hedge fund industry, the JSE said on Monday that it had acquired Momentum's managed account platform (MAP).

This followed approval for the transaction from the Competition Commission.

"This risk management tool, which offers hedge fund investors greater protection by segregating investors' assets from the hedge fund manager, was developed to monitor hedge funds' trading activity, thereby ensuring that they remain within agreed investment mandates," said Allan Thomson, the head of derivatives trading at the JSE.

The acquisition made the JSE the first exchange in the world to endorse a managed account platform that would provide more transparency to hedge fund trading.

RMB Holdings [JSE:RMH] and Momentum developed MAP in 2007 as a way to create a more robust framework for institutional participation in the local hedge fund industry.

"The market has been regarded as opaque, both locally and globally," said Braam Jordaan, who is responsible for Momentum alternative investments.

The gradual shift towards increased institutional investment in the hedge fund industry over the past few years resulted in the need for a broader application of the technology.

"It became clear early on that this concept had greater industry-wide benefit and it needed to be driven by an independent industry-wide player. The JSE, with its unique position in the South African financial markets landscape, is ideally placed to fully realise the potential of MAP," he said.

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