Hedge Fund Reader : Global need for regulating Hedge Funds

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July 10, 2005

Global need for regulating Hedge Funds

The recent debate on need for regulations for the $1 trillion Hedge Fund industry touched new heights. Much has been said about the need for transparency and disclosure in the recent past. Last week European Central Bank President Jean- Claude Trichet urged Europe to cooperate with US in order to find ways and means to regulate hedge funds. He emphasized on the requirement for a ‘transatlantic’ consensus on the same between the two giants. Of late the mammoth growth of the hedge fund industry has spurred comments highlighting this need from both politicians as well as from central bankers across continents. German Chancellor Gerhard Schroeder had also voiced his concern over the same and asked that the industry should operate on regulations that would provide some immunity to the investors. Though the requirement for regulation has been seen by various parties, it has also been made clear that the formulation of regulations by regulators should be tackled ‘with a sense of proportion’. Amidst all this there are some parties like Swiss central bank that feel that the funds should not be regulated as they do not pose a threat to the financial stability of the system. Bloomberg.com reports:

“Given the global nature of the hedge fund industry, a regulatory response can only be given on the basis of a solid international consensus and in particular a transatlantic consensus,'' said Trichet in a speech today at a financial conference in Paris.

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July 10, 2005 in Regulation | Permalink