UBS’s <UBSN.VX> prime broking unit has made 11 new hires in Asia over the last year and plans to increase its market share among hedge funds in the United States, where it ranks in the top six.

The Swiss bank has also started a managed account business in London to help clients who want more transparency and greater liquidity when investing in alternative assets.

 

"We’ve bulked up our staffing and our resources in the region," Stu Hendel, head of UBS global prime broking business, told Reuters late on Thursday about Asia.

 

Beyond Asia, the bank is aiming to increase its market share in the United States and will name a top banker to look after the hedge fund business in Zurich, he added.

 

Hendel who spent 18 years at Morgan Stanley <MS.N>, which ranks alongside Goldman Sachs <GS.N> as the top two prime brokers in the United States, joined UBS in July last year.

 

"We have hired about 11 people in the last year," said David Gray, head of UBS prime brokerage in Asia, adding the hires included specialists in areas such as information technology and law.

 

Singapore and Hong Kong are seeing an increase in hedge fund activity as global funds move to Asia, attracted by the region’s strong economic growth and lighter regulation at a time when Western countries are looking to tighten control over the industry.

 

HIGHER BAR

 

Hendel said the bar to start a new hedge fund has gone up to $100 million in the United States from $25-$50 million before the financial crisis, and warned that smaller startups will find it hard to attract investor money.

 

He said established hedge funds have not been forced to cut fees despite the noise around the issue even as the industry struggled to make double-digit gains in each of the last three years.

 

Hedge funds typically charge a management fee of 2 percent or sometimes more on assets -- well above the fee charged by mutual funds -- plus 20 percent of returns above a pre-agreed benchmark.

 

But Hendel said fund of hedge funds managers are already facing investor pressure to cut fees.

 

"First it is going to hit fund of funds. I think it already has because of the added level of management and performance fees coming out of the relatively muted hedge fund environment," he said.

 

Hendel also warned that if European regulations change dramatically, hedge funds will move out of key money management centres in Europe such as London to places like Geneva and Asia.

 

"Some hedge funds have moved from the U.K. to Geneva and other places outside the main money centres but it is a trickle," he said.

 

"The whole regulatory environment is the huge elephant in the room when it comes to hedge funds."

 

France, Britain and the United States have been embroiled in a months-long dispute about a draft European Union law to tighten controls on hedge funds and private equity firms.