Six months since Denmark's domestic hedge fund law took effect, not a single hedge fund has been approved, which isn't saying much, really, since HedgeNordic reports there have been only about five applications to date. Part of the problem is that the Danish Financial Supervisory Authority set a Jan. 1 deadline for applications, and it has taken no action on the applications while it works out the kinks in the law.

One problem concerns fund liquidity, which, according to the law, would require hedge funds to post "emissions and redemptions" once a month; currently many funds use a prior-notification model. But a bigger kink makes it almost impossible for funds of hedge funds to exist in the Danish HF landscape. The new law requires hedge funds to publicize their net-asset value activity once a month, and FOFH's just can't get that information from their underlying funds that often.

 "[It's] a bit of an odd move on the part of the authorities if hedge funds are meant to hold an appeal to private investors as well," Casper Hallas, a fund manager at Scandium Fund, told HedgeNordic. "This way they are missing out on the potentially safest and most diversified hedge fund investment type."

The FSA reportedly is thinking of changing the rules regarding prior notification; perhaps it will do the same for NAV postings.