According to the Financial Times, foreign fund managers may begin to minimize their business with the US. Due to the CFTC’s new definition of what constitutes a “US person,” fund managers in Europe and Asia who have a principal base of business within the US will now have to conform to the CFTC’s new regulations.

Fund managers who fall under this new definition will now be required to raise their margin requirements and increase reporting and transparency. While Europe wasn’t expecting to meet these requirements under their own laws until mid-2014, foreign fund managers who now fall under the CFTC’s watch will be paying compliance costs much sooner than that.

Experts are saying that the CFTC’s new rules will affect fund performance, as the higher cost of doing business will detract from returns. Many also worry that new disclosure rules will lead to confidentiality issues offshore.

Outside of costs, these new rules are also causing quite a bit of confusion for institutions trying to determine whether or not the rules even apply to them. While US capital makes up 69 percent of European and 75 percent of Asian hedge funds, much of this money is invested by brokers or advisers on behalf of an investor.

With the CFTC leaving fund managers scratching their heads, it seems likely that more issues will continue to rise as the SEC comes up with its own definition of what constitutes a “US person.”