As it is, regulations in Asia already are in some ways more stringent than those in the United States, where the majority of the US$1 trillion (HK$7.8 trillion) in hedge fund assets originate and are managed, experts said.

``Generally, Asian regulators have grasped the hedge fund nettle early, and fairly effectively,'' said Peter Douglas, council member for the Singapore chapter of the Alternative Investment Management Association, or AIMA, a global hedge funds organization.

``Perhaps the SEC [US Securities and Exchange Commission] should pay the region a study visit,'' Douglas said, noting in particular that Singapore and Hong Kong have put in place ``sensible permissions and controls.''

Hedge fund managers in Asia who cater to the ultra rich need to register with regulators, though they don't need approval for their portfolios. These include private banks with clients who have at least US$1 million in liquid assets and boutique fund managers who usually ask for a minimum of US$500,000.

In the United States, registration of hedge fund managers with more than 15 US clients or with a fund size of at least US$25 million will only start in February 2006. Karl Hurst, managing director of HT Capital Management, which manages around US$200 million in assets, said requirements in Hong Kong are numerous, from proof of experience to submissions of operating manuals. On-the-spot audits can also be conducted from time to time, said Hurst, who recently hired an independent compliance officer for his four-year-old company.

``Compliance isn't cheap and it's becoming harder and harder for boutique fund managers like us to cope with all the requirements on our own,'' Hurst said. He isn't complaining, however, noting the requirements are reasonable and worthwhile if it helps prevent a Long Term Capital Management-type fiasco in Asia. LTCM was one of the most successful hedge funds in the United States until 1998, when it racked up huge losses on its highly leveraged portfolio and had to be rescued by a US$3.5 billion bailout organized by the US Federal Reserve.

Hedge fund consulting firm Eurekahedge expects Asia-Pacific hedge fund assets to grow 42 percent to US$85 billion by year-end from US$60 billion in end-2004. The firm expects 600 Asia-Pacific hedge funds by year-end, up from 533 in end-2004.

Increasing participation from Asia's millionaires as well as new money from pension funds and retail investors in hedge funds will be the main driver of that growth, experts said.

Singapore opened its doors to retail hedge funds in 2001 and has four such products. Hong Kong, which allowed mass marketing in 2002, has 13 retail hedge funds. Japan and Australia also allow retail hedge funds. To be sure, there have been some problems with hedge funds in Asia - although nothing on the scale of LTCM.

Singapore's Aman Capital Management said last month that it's returning money to shareholders, after local media reported it has shed up to 22 percent of its US$242 million fund through derivatives losses.

An Aman Capital spokesman said the company remains in operation, but its fate is undecided.

In Hong Kong, the chief executive of Charles Schmitt & Associates is facing a legal battle for allegedly misappropriating a portion of the hedge funds assets he managed, which were in excess of US$200 million.

Regulators in both Hong Kong and Singapore say the problems with those two funds haven't changed their overall approach.

``Like other regulators around the world, we actively monitor industry developments and trends to try to anticipate and mitigate heightened risks,'' the Monetary Authority of Singapore said. ``We do not consider that the difficulties faced by [Aman Capital] will have a broader impact on the Singapore market.''

In Hong Kong, SFC spokesman Chan Chi-keung said that doing anything out of the ordinary now might send a false message that a problem is emerging.

Instead, regulators in Asia have tried to prepare for the expected rapid growth of the industry while taking a balanced approach to regulation. In May, for example, Hong Kong's SFC proposed changes to the way it regulates the hedge funds industry to make it easier for managers to get approval for their portfolios while at the same time subjecting them to tougher disclosure requirements.