Increased regulation for hedge funds on the way, says FSA’s Sants
Daily news headlines
FSA chief executive Hector Sants says hedge funds in the UK must meet supervisory standards
LONDON – Hedge funds will undergo a regulatory shake-up, according to chief executive of the UK Financial Services Authority (FSA) Hector Sants. Speaking at the Hedge 2008 conference in London, Sants underlined key areas of focus for the FSA concerning hedge fund supervision.
Sants was keen to stress the role of industry best-practice standards, particularly those issued by the Hedge Fund Standards Board (HFSB) earlier this year, and those from the Managed Funds Association and the US President’s Working Group.
FSA supervision will focus on valuations, disclosure and market integrity. Sants praised the valuation principles established by the International Organisation of Securities Commissions (Iosco) as a reference point for managers to compare models, methodologies, sources and policies.
Sants said: “The industry has also shown a willingness to confront regulatory concerns, and during these difficult times it is pleasing to see a number of industry initiatives to raise industry standards. This includes working to ensure commonality and consensus between AIMA and the HFSB in the UK, as well as with the Managed Funds Association and the President's Working Group.”
Sants also pressed the commercial benefits of implementing better industry standards: “It is not only regulators who have an interest in standards of good practice, but it is also of course in the hedge fund manager's commercial interests, as robust procedures and controls are likely to be attractive from the standpoint of the investor. Therefore, irrespective of jurisdiction, hedge fund managers should find these standards useful to identify relevant areas they need to consider,” said Sants.
To address the immediate funding concerns of the crisis, Sants highlighted the renewed importance of stress testing, while emphasising the need for risk managers to demonstrate increased vigilance against mis-marking frauds due to heightened risks of financial crime in the current market turmoil.
“These incidents may not only affect banks and broker-dealers, but also portfolio managers. Weak systems, inadequate valuation policies and inadequate independent challenge of price verification all increase the susceptibility of firms to this risk,” said Sants.
Industry pessimism over the survival of hedge funds has been fuelled by Darwinian comments made by Emmanuel Roman, co-chief executive of hedge fund GLG Partners, who estimated that up to 30% of hedge funds could disappear this year.
The speech may be downloaded by clicking the link below
http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2008/1022_hs.shtml
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Banks will not be frowned upon for discount window borrowing – Fed official
Risk Live: more banks have completed paperwork to access Fed lending facility than a year ago
Capital One puts OCC’s tough stance on mergers to the test
Proposed Discover deal should be approved but will go under the microscope, ex-regulators say
As FCMs dwindle, regulators fear systemic risk
Panellists highlight dangers of clearing membership becoming more concentrated
EU banks fear green asset ratios paint an unfair picture
Industry lobbyist clashes with lawmaker over usefulness of new sustainability disclosure
EU watchdogs to launch prop trader capital review in April
Prop traders say bank-style IFR rules are driving them out, but doubt EBA will suggest changes
Investors say new SEC disclosures may sit on shelf
Advisory committee questions value of rule 605 changes, even for retail investors
CFTC hears ‘call to action’ from swaps end-users on Basel III
Commissioner Pham mulls engaging with prudential regulators over capital hit on clearing
Iosco gears up for ‘intensive work’ on AI regulation
Watchdogs risk ‘falling behind the curve’, secretary-general warns; FSB also working on guidance
Most read
- Top 10 operational risks for 2024
- As FCMs dwindle, regulators fear systemic risk
- Top 10 op risks: AI fears drive cyber risk to record high