FSF warns of hedge fund risks
Financial institutions could be at risk from a drastic reduction in liquidity if hedge funds pull back suddenly from the market, says a report published on May 18 by the Financial Stability Forum (FSF).
Although indirect risk is difficult to estimate, the FSF says investors should improve stress tests to estimate their exposure to a drop in market liquidity and asset prices, and calls for improvements in financial infrastructure to strengthen the resilience of the system against sudden liquidity
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