The launch of Italy's first onshore hedge funds will be delayed by a lack of local prime brokers, despite a thumbs-up for alternative investment by the Treasury ministry and Banca d'Italia late last year.

Banca Intermobiliare di Investimenti e Gestione, Ersel Asset Management and Kairos Partners are the first three Italian firms to receive authorisation by Banca d'Italia, Italy's central bank, to set up alternative investment vehicles. So far, however, no group has started raising assets for their new funds as the new legislation states that hedge funds need an Italian depository bank to act as custodian and prime broker.