SIR ANDREW LARGE attacked London’s ban on listed hedge funds as “anachronistic” yesterday as he was named chairman of a record-breaking new €1 billion (£675 million) hedge fund floating in Amsterdam.

The former Bank of England Deputy Governor and chairman of the Securities and Investments Board, forerunner to the Financial Services Authority, is to chair the new investment vehicle operated by the London hedge fund manager Marshall Wace. If it succeeds in raising its target of €1 billion it will be the world’s biggest listed hedge fund.

Sir Andrew said that London’s restrictions on the listing of single-strategy hedge funds was one reason for the choice of Amsterdam. Single-strategy hedge funds are usually banned from full listings in London because they are not sufficiently diversified and because of restrictions on short-selling. “It’s a historic thing,” Sir Andrew said. “I think it’s a bit of an anachronism.”

Marshall Wace is the second hedge fund manager this month to choose Amsterdam to raise money in a permanent capital vehicle. Two weeks ago the Anglo-French hedge fund manager Boussard & Gavaudan chose it to raise $562 million.

Investment bankers say more hedge funds are queueing up to float permanent capital vehicles, which are attracting investors precluded from investing in traditional hedge funds.

The FSA said in March that it was considering relaxing restrictions on investment companies. But the earliest the new regime could come in would be the third quarter of next year.

There was confusion last night about whether the new vehicle could have been listed in London, with the FSA claiming that foreign-based investment companies — the new fund, MW Tops, is registered in Guernsey — were already able to list in London.

Sir Andrew’s appointment is a coup for Marshall Wace, whose highly successful investment style has come under scrutiny from regulators amid concern that it might inadvertently encourage market abuse.

Marshall Wace, which has €5.9 billion under management, solicits investment ideas from investment bankers and brokers and rewards the best with generous commissions. That might tempt bankers to exploit inside information, it has been claimed.

However, last month the FSA gave a nod of approval to so-called alpha capture systems, arguing that cheats were more likely to use other methods. Marshall Wace also expects to be formally cleared next month of any wrongdoing in a case involving Alcatel shares in 2002 being investigated by French regulators.

Sir Andrew is being paid a one-off £250,000 by Marshall Wace and will receive £70,000 a year in director’s fees.

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