The Australian hedge fund industry will not see substancial changes as a result of international legislation for the industry, according to ASIC.

"We don't fundamentally see huge changes to the industry in a domestic sense," ASIC senior executive leader Ged Fitzpatrick said yesterday at the Annual Investment Administration Conference in Sydney.

However, Fitzpatrick indicated the proposed registration requirements would force hedge funds to review their internal processes.

"There will be a set of requirements that will apply that people will need to reconsider how they operate their business model," he said.

"Obviously there are aspects in terms of dealing with the disclosure requirements and engagements and with reporting requirements that will require some consideration how this will lead to operational changes in the organisations themselves."

The effort in creating a standardised set of international legislation is led by the International Organization of Securities Commissions (IOSCO).

IOSCO came up in 2009 with a number of principles that formed the basis for legislative change.

Apart from registration and disclosure requirements, the principles state that hedge fund managers should provide information to enable the regulator to analyse the institution and potential systemic risks in the sector.

Regulators themselves should take account of industry developments and should have the authority to cooperate and share information.

The cooperation between the different regulators should provide an environment in which hedge funds could not just move their operations to jurisdictions with low regulatory hurdles, Fitzpatrick said.

"One of the key benefits of this whole process is the internationalisation of regulators' responses and ensuring that we do have some standardised global principles reduces the opportunity for regulatory arbitrage," he said.

The IOSCO is currently developing a set of proposals for new legisaltion. "At this point in time, we are looking at how to feed effective regulations back into these principles," Fitzpatrick said.

In the past, many hedge funds have been subject to a more lenient level of oversight, because they did not fall under the legal description of a public investment company, or qualified for exemptions to the existing legislation.

However, the global financial crisis prompted regulators to take action in changing the requirements for hedge funds, as funds were forced to suspend redemption or even close down.