AIMA, representing the global hedge fund industry in international discussions about the future regulatory framework of the industry, announced its initiatives in a bid to pre-empt possible G20 measures aimed at imposing bank-like regulation of the sector.
The policy positions include regular reporting and increased transparency of systemically significant positions and risk exposures by managers of large hedge funds to national regulators, an aggregated short position disclosure regime to national regulators, support for policies to reduce settlement failure, including naked short selling, and support for a global manager-authorisation and supervision template based on the UK regulator's model.
While the measures have been welcomed by the industry, it remains to be seen if global leaders as well as organisations such as the Financial Stability Forum, will consider AIMA's initiative sufficient for forego tougher oversight of the industry on a global basis.
The organisation's members manage more than three quarters of hedge fund assets globally. It is the only organisation able to claim global representation of the industry. Aside from hedge funds its members include fund of hedge fund managers, prime brokers, legal and accounting firms and fund administrators.
The call for global standards for the industry was based on convergence of existing industry standards work and was drawn up by AIMA, the Hedge Funds Standards Board and the International Organisation of Securities Commissions as well as the US President's Working Group on financial markets and Managed Funds Association.
"We want to dispel once and for all this misconception that the hedge fund industry is opaque and unco-operative. That is why we are declaring our support for the principle of full transparency of systematically significant positions and risk exposures by hedge fund managers to their national regulators through a regular reporting framework," declared," declared Andrew Baker, AIMA's chief executive.
"We are confident our members recognise it is in everyone's best interests if we co-operate fully in the important on-going international efforts to examine and improve the supervisory framework of the future."
The initiative, which AIMA has dubbed 'the hedge fund matrix', is seen as a first step towards harmonisation of existing hedge fund industry sound practices including institutional investors, policy markets and regulatory authorities.