The European Commission takes another step in the review of regulatory and supervisory arrangements for all financial market actors in the European Union. Commission has launched public consultation on policy issues arising from the activities of the hedge fund industry.
The consultation is going to touch actual issues hedge fund face during the of international turmoil. It will make an important contribution to European and international reflections on whether the approach to the regulation and supervision of hedge funds should be reassessed in light of the financial crisis. The results of the consultation will be discussed at a high-level conference in Brussels in late February 2009, and will serve as the basis for European input into the parallel reflections on hedge funds at international level by the G20.
Key points of the consultation:
– Systemic risks. The consultation invites views on whether existing systems of macro-prudential oversight are sufficient to allow regulators to monitor and react to risks originating in the hedge fund sector and transmitted to the wider market through counterparties, including prime brokers, and through the impact on asset prices.
-Market integrity and efficiency. The consultation asks whether and under what circumstances the activities of hedge funds pose a threat to the efficiency and integrity of financial markets.
-Risk management. The consultation asks whether public authorities should concern themselves more with the way in which hedge funds manage the risks to which they and their investors are exposed, value their asset portfolios and manage any potential conflicts of interest.
-Transparency towards investors and investor protection. The consultation invites views on whether hedge fund investors are adequately protected and receive the information required for sound investment decisions.
L.D.