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West Palm Beach (HedgeCo.net) – Global hedge fund industry group, The Alternative Investment Management Association (AIMA), has welcomed the principles for hedge fund regulation published by the International Organization of Securities Commissions (IOSCO) today.
“We are very happy to welcome the publication of this report today because AIMA has already announced its support for several of the high level principles mentioned in it." Andrew Baker, AIMA CEO, said, “In our new policy platform of 24th February, we said that we supported global registration for managers and we are glad that IOSCO has also come out in favour of this.
“We also expressed our support for the reporting of systemically relevant information by managers of large hedge funds to their national regulators, and this is another one of IOSCO’s key principles.
“We are also delighted that IOSCO refers to the ‘development, implementation and convergence of industry good practices’ because AIMA has been extremely active in this area and is continuing a great deal of work on it with the other groups involved. We are following up on a G20 action point in this respect," he continued.
In a note of caution, however, Baker said, "We would stress that it is hedge fund managers, rather than the funds themselves, that should registered. It is also mentioned that hedge funds use derivatives for speculative purposes without stating that exchange-traded and over-the-counter derivatives are principally used by the relevant market participants for risk management purposes."
“Finally, we are concerned that these recommendations may lead regulators to seek quantity rather than quality of data. It is important that regulators have the expertise and resources to deal with the data they receive.”
AIMA has more than 1,100 corporate members worldwide, based in 40 countries, including hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators.
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New York (HedgeCo.Net) – Hedge funds can expect to be kept on a tighter leash in the near future, as leaders from all over the world met at the G20 summit in London to discuss the next steps towards remedying the worst financial crisis in six decades.
Agreeing that lax regulation on all levels helped to fuel the credit crunch, the 20 leaders agreed to vamp up national regulators and to keep a watchful eye on any practices that may threaten international markets.
To some, this includes hedge funds, who have taken much of the blame for market meltdowns thanks to domino effects that stem from imploding funds and the practice of short selling which some say can create enough speculation and fear to cause plummeting stock prices.
The Financial Stability Forum, which has been around for over a decade, will be renamed the Financial Stability Board, and will have the task of overseeing international markets, banks, and to some extent, hedge funds.
The FSF has already stated that hedge funds must disclose how much leverage they are using, so that investors can better gauge the risks involved.
In an effort to quell outrageous bonuses and pay, the FSF has said that an executive’s pay must directly reflect the risks they are taking, halting any million dollar pay days for a risky wager. They also vowed to closely monitor the credit ratings agencies, whose actions contributed greatly to the economic meltdown.
The leaders also pledged to boost the war chest of the International Monetary Fund by adding $500 billion, promised to crack down on offshore tax havens and those individuals who failed to disclose information, and threw in $250 billion to help kick start trade over the next two years. An agreement was made not to introduce any new policies that would restrict trade through 2010.
Although the FSF has not drafted any rules as of yet on hedge funds or tax havens, they did agree that “systemically important hedge funds” will be regulated.
"Today the largest countries of the world have agreed on a global plan for economic recovery and reform," said British Prime Minister Gordon Brown.
President Obama agreed, saying that “the London summit was historic.”
French President Nicolas Sarkozy, who is an advocate on stricter regulations for hedge funds added, “The G20 countries have decided on a profound reform of the international financial architecture, which has not been done to such an extent since the Bretton Woods accords in 1945.”
U.S. stocks surged following the summit and the promise of a renewed economy that came with it. The Dow Jones Industrial Average shot past 8,000 for the first time since February 10. It ended the day up 2.8 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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West Palm Beach (HedgeCo.net) – “We welcome the publication of the Turner Review, which is an impressive and comprehensive piece of work." Andrew Baker, Chief Executive of The Alternative Investment Management Association (AIMA), said, "It is about the banking system’s role in the current financial crisis and as such its principal focus is the banks, not the hedge fund industry. We are grateful to Lord Turner for his even-handed and measured approach and for not making hedge funds the scapegoat for this crisis."
"The Review says that regulators and central banks need to gather better macro-prudential information on hedge fund activities and we completely support this – in fact we called, in our new policy platform of the 24th February, for the disclosure of systemically significant information by hedge fund managers to their national regulators (not all assets are managed in a collective fund structure). We also called for a global manager authorisation and supervision template on the FSA model. AIMA took the lead on behalf of the hedge fund industry globally in these respects.
We are glad that the Review points 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”.
Given those qualifications, we do appreciate why in the interests of financial stability the Review says that regulators need the power to apply appropriate prudential regulation to hedge funds if they judge that their activities have become bank-like in importance.
We note that any such regulation is hypothetical at present (the Review talks of “if it ever did become appropriate” to do this) and we are glad that Lord Turner has stressed that any regulation in this respect should focus on economic substance not legal form.”
AIMA has more than 1,200 corporate members worldwide, based in 43 countries.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators worldwide.
“We welcome the communiqué from the G20 Finance Ministers. AIMA, as the trade body for the global hedge fund industry, has already announced its support both for the authorisation and regulation of hedge fund managers worldwide with their national regulators, and for the disclosure of systemically significant information.
This is an endorsement of the industry leadership displayed by AIMA when we put out the new policy platform on 24th February that featured a series of major proposals to increase transparency. We are pleased that these proposals are reflected in this communiqué.
We are also glad that the G20 made reference in their Progress Report on the Washington Action Plan to the global initiative on the convergence of hedge fund industry standards by AIMA, the Managed Funds Association (MFA) and the members of the Asset Managers Committee established by the President’s Working Group on Financial Markets.
Our three groups, which represent the great majority of hedge fund managers globally, are working towards a common set of principles to take this process forward, which is a major step forward by the industry worldwide.”
Andrew Baker, Chief Executive of AIMA London, 16th March 2009
For media enquiries, please contact Christen Thomson, AIMA Director of Communications, on +44 (0)2078228380; email – cthomson@aima.org
About AIMA
As the only truly representative global hedge fund association, AIMA, the Alternative Investment Management Association, has more than 1,200 corporate members worldwide, based in 43 countries.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators worldwide.
AIMA is a dynamic organisation that reflects its members’ interests and provides them with a vibrant global network. AIMA is committed to developing industry skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists. For further information, please visit AIMA’s website, www.aima.org.
