The London Stock Exchange announced that it will launch a dedicated new market for issuers of specialist funds.

The Specialist Fund Market, which will open for new admissions in November, will provide a regulated market for specialist vehicles such as single strategy hedge funds and private equity vehicles.

The new market will be open to both UK and international funds, and will be complementary to the FSA’s proposed regime for investment entities listing on the Main Market. Issuers that wish to market funds to a wider audience, including retail investors, will continue to have access to the Main Market, which offers the potential for inclusion in index tracker funds and to AIM, and which has attracted investment entities such as property funds or other conventional investment funds. Specialist Fund Market securities will not be included in the FTSE UK Index Series and will therefore not be included in index tracker funds.

The Specialist Fund Market will be a Regulated Market operated in accordance with EU Directives. The FSA will approve issuers’ prospectuses in line with the Prospectus Directive and monitor issuers’ conformity on an ongoing basis with the Transparency Directive, Market Abuse Directive and other EU requirements.

“Hedge funds and private equity are an increasingly important asset class that pension funds and other institutional investors want access to in order to diversify their overall portfolios and improve their returns,” said Martin Graham, director of markets at the LSE. “We already offer investors and issuers a choice of routes to market according to the types of investors that issuers wish to target and the risk premiums sought by investors. The introduction of the Specialist Fund Market enhances that choice by creating a separate, clearly-labelled market for alternative assets such as single strategy hedge funds and private equity vehicles. It will enable the London markets to continue to meet what we know is a strong demand among issuers and investors for a regulated market quotation suitable for these more complex entities, while remaining clearly delineated as a professional market.”