The sudden closure after heavy derivatives trading losses of Singapore-based Aman Capital Global has precipitated Hong Kong's financial regulator to increase its inspection of some of the territory's largest hedge funds.

Hong Kong’s Securities and Futures Commission has spoken to senior executives in the territory’s 10 largest hedge funds to assess the industry's level of gearing.

According to Eurekahedge, Hong Kong saw the launch of 14 new hedge funds in the year to the end of May, compared with six in Singapore. The sector had about $10 billion of assets under management in Hong Kong at the end of May, compared with $4.5 billion in Singapore.

Aman Capital Management is one of more than 200 Singapore-based investment firms exempt from regulatory control, so long as they cater to fewer than 30 "accredited" investors. Hedge funds in Hong Kong undergo a lengthy licensing process, including a tough examination for fund managers.