Hedge Funds Pledge To Support 'Full Transparency'

by Phillip Morton, Investors Offshore.com

26 February 2009

The Alternative Investment Management Association (AIMA), the trade body for the global hedge fund industry, has said that it will support the principle of full transparency and supervisory disclosure of systemically significant positions and risk exposures by hedge fund managers to their national regulators.

The initiative, announced by AIMA on February 24, is one of a series of policy positions in the association’s new platform. Other key new strands of the platform include an aggregated short position disclosure regime to national regulators, support for new policies to reduce settlement failure (including in the area of naked short selling), and a global manager-authorisation and supervision template based on the model of the United Kingdom's Financial Services Authority (FSA) and a call for unified global standards for the industry.

AIMA’s members manage more than 75% of hedge fund assets globally and the association has over 1,200 member firms in 43 countries. Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators.

The association is representing the global hedge fund industry in on-going international discussions about the future regulatory framework for the industry, notably with the organisations tasked by the G-20 to address the issue, such as IOSCO and the Financial Stability Forum.

The policies in AIMA’s new platform include:

• Regular reporting and increased transparency of systemically significant positions and risk exposures by managers of large hedge funds to their national regulators (the regulator of the jurisdiction in which the manager is authorised and registered to operate).
• An aggregated short position disclosure regime to national regulators.
• Support for new policies to reduce settlement failure (including in the area of naked short selling).
• Support for a global manager-authorisation and supervision template based on the UK’s FSA model.
• A call for unified global standards for the industry based on the convergence of existing industry standards work, such as that authored by AIMA, the Hedge Funds Standards Board, IOSCO, the President's Working Group and the Managed Funds Association.

Andrew Baker, Chief Executive of AIMA, said: “We want to dispel once and for all this misconception that the hedge fund industry is opaque and uncooperative. That’s why we are declaring our support for the principle of full transparency of systemically significant positions and risk exposures by hedge fund managers to their national regulators through a regular reporting framework. We are confident that our members recognise that it is in everyone’s best interests if we cooperate fully in the important on-going international efforts to examine and improve the supervisory framework of the future.”

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