The HedgeTrust Exchange will be launched January 2000. According to Mr. Wong, the HedgeTrust Exchange will be offered exclusively through www.hedgeworld.com. The HedgeTrust Exchange allows firms to indicate an expression of interest to buy or sell a non-U.S. domiciled hedge fund or to place a firm buy or sell order of a non-U.S. domiciled hedge fund. This provides liquidity for buyers and sellers of hedge funds that are closed or that have restrictive subscription or redemption periods. The HedgeTrust Exchange will search and match for a corresponding buy or sell order for that security and will cross the trade on the Bermuda Stock Exchange. Indications of interest, buy and sell orders and actual crosses are all reported on an anonymous basis unless otherwise indicated by all relevant participating parties. The Bermuda Stock Exchange is recognized by the United States Securities and Exchange Commission as a Designated Offshore Securities Market under Regulation S of the Securities Act of 1933.
Hedge funds do not have to be listed on the Bermuda Stock Exchange in order for a HedgeTrust Exchange crossing to take place between buyer and seller, but hedge fund managers must consent to the transfer between buyer and seller. Assuming that the buyer meets the accredited investor terms of the subscription agreement, the HedgeTrust Exchange provides a valuable service for the hedge fund. Before the advent of the HedgeTrust Exchange, a hedge fund would normally have to redeem the interests of the selling investor out of the fund's own cash holdings. Thus, the HedgeTrust Exchange seeks to provide additional liquidity to the marketplace.
U.S.-based ERISA and tax-exempt institutions that invest in non-U.S. domiciled hedge funds will be able to indicate expressions of interest and trade through Tremont Securities, Inc., a U.S.-based registered broker-dealer and a wholly-owned subsidiary of Tremont Advisers, Inc. FITX Capital Limited, an affiliate of HedgeWorld Limited, is a trading member of the Bermuda Stock Exchange and will provide the crossing and reporting facilities to the Bermuda Stock Exchange. FITX Capital Limited will also list hedge funds on the Bermuda Stock Exchange.
Robert Schulman, Chairman of HedgeWorld Limited and President and Chief Operating Officer of Tremont Advisers, Inc., a Rye, New York based public company and strategic partner and founding investor in HedgeWorld Limited, said, "HedgeWorld is focused on being the innovative institutional leader committed to the growth of the global alternative investment industry and fully embracing electronic commerce and trading vehicles that can reinvent the way the hedge fund industry manages its business. By taking advantage of the efficiency and effectiveness of the Internet, HedgeWorld will be the catalyst for ushering in a new era of transacting business."
William Woods, Chief Executive Officer of the Bermuda Stock Exchange, commented, "HedgeWorld.com, FITX Capital Limited and the HedgeTrust Exchange are ideal partners for the Bermuda Stock Exchange as they are the innovative leaders on the Internet who are committed and focused on serving the needs of the global alternative investment industry and are addressing the liquidity needs of sophisticated investors. HedgeTrust Exchange was designed to meet the needs of buyers and sellers of existing non-U.S. hedge funds and we welcome their commitment to encouraging listings on the Bermuda Stock Exchange."
Mr. Wong stated that "we could have probably created our own ECN or electronic communications network and picked any offshore jurisdiction, but we firmly believe that the Bermuda Stock Exchange is the premier and most innovative offshore electronic stock exchange. We believe that working with the Bermuda Stock Exchange was compelling. Bermuda provides many benefits such as additional legislative protection as a result of the recent passage of the Electronic Transaction Act (1999) and an impeccable reputation and infrastructure resources. In particular, we were attracted by the responsiveness and innovativeness of the Bermuda Stock Exchange and by the very attractive terms that they are willing to extend to actively traded hedge funds that list on the Bermuda Stock Exchange through FITX Capital Limited, which is a trading member of the Exchange."
HedgeWorld.com is the first e-commerce-enabled web site offering community, commerce and content services to the global hedge fund and alternative investment industry. The web site serves the needs of high-net-worth individual and institutional investors, fund managers and the industry's service providers. HedgeWorld.com is the exclusive Internet distributor of the TASS+ database, the industry's premier hedge fund performance database. Registered accredited investors can access detailed fund profile reports with more than 350 data fields of information on 2,200 hedge funds managed by more than 1,400 managers through HedgeWorld.com. In addition, the site provides daily news coverage of the hedge fund industry and provides online tools to fund managers and service providers that enable them to manage their information more efficiently and transact business more effectively.
HedgeWorld.com is owned by HedgeWorld Limited, a Bermuda-based company dedicated to providing a global online community for the hedge fund industry to facilitate the exchange of information, capital and services. HedgeWorld Limited and FITX Capital Limited are wholly owned subsidiaries of FITX Group Limited, an exempted Bermuda-based holding company. Tremont Advisers, Inc. (OTC - TMAVB), one of the minority investors in HedgeWorld Limited, is a diversified holding company which, through its subsidiaries, including Tremont Securities, Inc., is primarily engaged in three core businesses: consulting, information and investment products for the global alternative investment industry.