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 the Financial Stability Forum. The FSF warns that firms could be exposed to a liquidity crunch if hedge funds reduce investment levels. Although indirect risk is difficult to estimate, investors should improve stress tests to estimate their exposure to a drop in market liquidity and asset prices. The FSF calls for improvements in financial infrastructure to

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