Submitted on Monday 23rd March 2009
Hedge Funds may be clipped
The FSA are likely to take a keener interest in the activities of hedge funds if recent responses are to be relied on. Hedge Funds have proliferated in recent years and have generally operated outside of the regulatory system as their customers tend to be professional investors. Their returns are on average more aggressive than their more heavily regulated counterparts and there are concerns that as well as smoothing out market anomalies they may also cause quite a few.
Hector Sants, chief executive of the FSA, told MPs last month that the rest of the world needed to catch up with the FSA in overseeing hedge funds. Lord Turner and Mr Sants have said the FSA will extend its oversight further into the shadow banking system, including hedge funds. Lord Turner took a no-nonsense line when he likened the FSA stance to the duck factor – if something looks and sounds like a duck, it will be treated as if it is one.
