Hedge funds assert their case
A wave of regulation following the initial impact of the global financial crisis has targeted the alternative investment sector, and hedge funds in particular. The industry is mobilising to influence and deflect some of the measures. Caroline Allen reports
This article appears courtesy of Global Investor
Five years ago, hedge funds were at the pinnacle of the industry, the envy of the lower investing orders. But the global financial crisis has put the sector on the back foot, with a series of measures now set to curtail previous activities. Due partly to its culture of discretion and individuality, it may have been slow to respond, but it is now mobilising to defend its role and future.
Among the initiatives in the pipeline: laws from the UK, the US and the new EU Directive. Just days before the European elections, the European Commission proposed a comprehensive and aggressive restructuring plan for the way financial services institutions are supervised. The move comes just three months after a consultative report from Jacques de Larosière, chairman of the High Level Group on Financial Supervision in the EU, recommended phased implementation of a new supervisory regime.
EU Commissioner Charlie McCreevy said financial supervision in Europe has not kept track with market integration. "The crisis has shown that the current system is not sufficiently responsive and not appropriate for a single financial services market. This new system will combine the expertise of all those responsible for safeguarding financial stability, with strong European bodies to coordinate their work."