FSF warns of hedge fund risks

The growth of the hedge fund industry is hindering risk management and valuation processes and is putting margins under pressure, says a report by the Financial Stability Forum (FSF), issued on May 18. The report warns that firms could be exposed to a liquidity crunch if hedge funds reduce investment levels. Although indirect risk is difficult to estimate, the FSF says that investors should improve stress tests to estimate their exposure to a drop in market liquidity and asset prices. It cal

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