  We consider the mean-variance hedging problem under partial Information. The
underlying asset price process follows a continuous semimartingale and
strategies have to be constructed when only part of the information in the
market is available. We show that the initial mean variance hedging problem is
equivalent to a new mean variance hedging problem with an additional correction
term, which is formulated in terms of observable processes. We prove that the
value process of the reduced problem is a square trinomial with coefficients
satisfying a triangle system of backward stochastic differential equations and
the filtered wealth process of the optimal hedging strategy is characterized as
a solution of a linear forward equation.
