Heroes or cowboys?

Banks and energy companies alike are sceptical about the role that hedge fundsplay in energy markets. Are they really an aid to market stability, or is theirpresence compounding market volatility? Paul Lyon reports

When hedge funds signalled their interest in participating in the energy tradingand financing markets a few years back, most market participants viewed the newsas a positive development. Their entry would aid liquidity, and cash injectionsfor troubled power plants could only be welcomed, the argument went.

The tide may have turned, however, as a number of senior bankers have begun toexpress concern about the role of hedge funds in the market.

Hedge funds have actually done little to improve

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