The G20’s April 2 communiqué, which seeks to increase regulation of hedge funds and other high-yield investment vehicles, has been given a cautious welcome by the hedge fund industry.
In response to the G20’s communiqué, Managed Funds Association (MFA) President and Chief Executive Officer Richard Baker stated the following:
“Financial system stability and the restoration of investor confidence are at the top of MFA’s agenda. As the leading association representing the global hedge fund industry, MFA is committed to working with policy makers to ensure that smart regulatory reforms are constructed to help re-build investor trust and protect the integrity of the markets.”
“Hedge funds, whose investors have been negatively impacted by the turmoil in the financial markets, have a shared interest with other market participants and policy makers in reestablishing orderly, stable markets. Hedge funds have a strong role in helping to hasten economic recovery as liquidity providers, risk dispersers and as a source of capital for businesses hoping to grow and create new jobs. The industry is taking steps to restore investor trust through the promotion of sound business practices and tools for investors to use as they conduct ongoing due diligence of money managers, as a complement to a smart regulatory framework. Regulatory reform should strengthen the overall financial system without impeding hedge funds’ ability to contribute to the global economic recovery that the leaders of the G-20 hope to advance.”
In a separate statement the Alternative Investment Management Association (AIMA), welcomed the proposals:
“AIMA is very glad that the G20 has made such a significant commitment to financial stability. Last year was the worst year on record for the world’s hedge fund industry and of course our members want stability returned to the global economy as much as everyone else. The issue of financial stability is the most important currently facing global policy makers and so we welcome the new Financial Stability Board and look forward to working as closely with it as we have with its predecessor, the Financial Stability Forum.”
“We are determined to do everything we can to assist international policy makers in preventing systemic instability in the future and the most important way we can do that is through the provision of information. If policy makers can get, through improved information, a better sense of concentrations of risk in global financial markets, then they will be better placed to prevent future instability.”
“We have already offered to play our part in providing this information – in our new policy platform of the February 24 we supported the provision of systemically significant information by large hedge fund managers to their national regulators. Our new policy platform also stressed our support for a global manager authorisation-supervision template. AIMA took the lead on behalf of the hedge fund industry globally in these respects and this is an endorsement of our position.”
“Of course it is right that systemically significant institutions should be subject to oversight. We would however note the conclusions of Lord Turner in his recent Turner Review who pointed out that hedge fund leverage ‘is typically well below that of banks – about two to three on average’ compared with levels of up to 50 times with some of the banks; and that ‘hedge funds in general are not today bank-like in their activities’. Although we agree that any entity that provides banking services should be regulated as a bank, the vast majority of hedge funds do not fall into this category.”
“The current crisis is a banking crisis and the major international reports on it so far have concluded that the hedge fund industry’s role was marginal. Indeed we think that there is increasing awareness that our industry can play a positive role in assisting the recovery because of the willingness of hedge funds to provide counter-cyclical risk capital. The US has taken the lead in this respect with the Public-Private Investment Program and we hope that other countries will follow this lead.”
Although the impact of the London meeting will not be apparent until new legislation comes into force, it seems that the G20’s communiqué will have limited additional implications on the UK and US industry. It seems that the Group of 20 has simply re-emphasised the need to implement policies that were in the pipeline prior to the London summit.
.
Network Tweets Archive
| Resources | Partners
| Site Map | Links
| Newsletter
Archive | Contact
| RSS Feeds
About | Syndication |
Advertising & Marketing |
Recruitment |
Terms & Conditions |
Privacy
Copyright © 2012 - All Rights Reserved - Tax-News.com
All content provided by BSI Media
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment