Regulation could be an opportunity for the fund of hedge funds industry to attract investors again

Adapting to regulation

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The implementation of the granularity adjustment, first introduced in the Basel framework, makes it possible to take the diversification potential of funds of hedge funds (FoHFs) into account and in turn to reconcile the outcome of the standard formula in Solvency II with empirical evidence.

With the severity of the recent financial crises, systemic risk issues have resurfaced for the first time in many years. It is no surprise to see a wave of new regulations and regulatory proposals on the ­fin