Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Independent – A new EU directive aimed at tightening up the regulation of hedge funds could be counter-productive and cause a mass exodus of business from the International Financial Services Centre, a Dail committee was told yesterday.
The directive, being prepared under the supervision of EU Commissioner Charlie McCreevey, has run into opposition from almost every EU country and is unlikely to be finalised before the end of the current Swedish presidency, the Dail Committee on European Scrutiny was told yesterday.
The draft Alternative Investment Fund Managers Directive has been the subject of submissions from every EU member state, Colm Breslin of the Department of Finance told the committee.
New York Times Blogs – The compulsory registration of hedge fund managers was backed by a global regulatory body on Monday in an effort to restore investor confidence.
The International Organization of Securities Commissions, representing regulators from more than 100 countries, said the $1.3 trillion hedge fund sector did not cause the credit crunch but may have amplified its effects.
IOSCO’s final six principles flesh out a statement made in March, and a pledge from the G20 group of industrialized and emerging market countries in April, that all hedge fund managers should be registered and directly supervised, Reuters reported. Those principles include mandatory registration of hedge fund managers while prime brokers who provide funding to hedge funds should also be subject to mandatory registration and supervision.
The European Union has also put forward a draft law that goes further than IOSCO, while the U.S. is also planning mandatory registration of hedge funds but so far in a less extensive way than the EU.
Forbes – There should be regulation for areas which have previously been excluded from supervision such as hedge funds, investment banks and derivatives, European Central Bank Executive Board Member Lorenzo Bini Smaghi said on Friday.
‘There is no problem of over-regulation at the moment but there is a need to regulate areas that are not regulated,’ he said at an event in Milan.
Reuters – A Democratic member of the Securities and Exchange Commission called for stricter supervision of hedge funds, particularly large funds that have an impact on the broader financial markets.
Luis Aguilar said the market turmoil of the past year provides evidence that government oversight of hedge funds has not kept pace with the large role they play in stocks, debt and other assets. The fundamental bargain struck some 60 years ago — that hedge funds should be left alone because they only transact privately with the very rich — may no longer be valid, he added.
Jerusalem Post – While the recent G-20 summit in London provided world financial leaders with the opportunity to begin charting a path of recovery for the ailing global economy, the work to build the markets up and to ensure that a crisis like this never happens again will be left to the world’s securities regulators. Regulators around the world, due to their supposed lapse of supervision on the international securities industry, have come under fire for their role in allowing the crisis to occur.
Here in Israel, the country’s chief securities watchdog, Prof. Zohar Goshen, chairman of the Israel Securities Authority, has also been a center of attention with the publication of his "Goshen Plan," an ambitious agenda that seeks to restructure the local corporate bonds market by giving institutions a government guarantee covering 75-80 percent of new corporate bonds issued. This means the institutions will bear 20% of any loss, with the government bearing the rest.
LONDON (AP) – Britain’s financial services watchdog proposed sweeping changes to global banking regulations on Wednesday, including a crackdown on the "shadow banking" activities of institutions like hedge funds.
The government-commissioned banking services report recommends new rules on a wide range of issues from increased requirements on banks on holding capital to stricter controls on bankers’ bonuses to discourage excessive risk taking.
Financial Services Authority chairman Adair Turner said that the market economy remained the best means of delivering global prosperity, but major changes in regulation and supervision were required to ensure that it is focused on the needs of businesses and households rather than taking risks for quick return.
The report embraces actions necessary in Britain and also discusses those that would require international cooperation. Britain will host an April 2 summit of the Group of 20 rich and developing countries that will discuss ways to address the world financial crisis, including more regulation
Reuters – Hedge funds, credit rating agencies and all other important market players should be subject to regulation based on a global approach, European Central Bank President Jean-Claude Trichet said on Monday.
The worst financial crisis in over 80 years has sparked a rethink of how markets should be supervised to cut excessive risk-taking by banks.
"The current crisis is a loud and clear call for extending regulation and oversight to all systemically important institutions — notably hedge funds and credit rating agencies — as well as all systemically important markets — in particular the OTC derivatives market," Trichet said.
"What is currently under discussion is the precise way in which these elements should be integrated within an overall regulatory framework," he told a conference on supervision.
Reuters – The Madoff scandal could be a boon for mutual funds as investors shift into regulated asset management vehicles in Luxembourg or Ireland away from hedge funds in the Caymans, a German mutual funds executive said.
"There’ll be a drive clearly toward more transparency and stricter supervision. That could be good for mutual funds," Stephan Kunze, head of Europe at Deutsche Bank’s mutual funds arm DWS, told Reuters in an interview.
"A lot of strategies that have been set up in the Caymans will migrate to Luxembourg or Ireland-domiciled replicas (with) hedge fund strategies migrating onto mutual fund platforms," he said, speaking on the sidelines of DWS’s annual news conference.
Indianapolis Star – Paul Volcker, an adviser to President Barack Obama, urged "fundamental changes and reform of the financial system" that will help the U.S. economy recover from its crisis and promote future growth.
The former chairman of the Federal Reserve called for "particularly close regulation and supervision" of large commercial banks and other financial institutions whose failure would cause a breakdown in the banking system. Volcker, testifying to the Senate Banking Committee on Wednesday, reprised recommendations from the Group of 30 last month. Volcker spearheaded that report.
