The Securities Industry and Financial Markets Association (SIFMA) have responded positively to the President’s Working Group statement on the benefits and risks of hedge funds.
The report called for US financial regulators to take a consistent and uniform approach to dealing with hedge funds and advised that hedge fund managers should have information and risk management systems sufficient to keep their creditors and investors well informed of the risks they pose.
The report also called for regulators to clearly communicate their expectations for risk management to hedge funds’ regulated counter parties, which notes hedge funds are increasingly using complex financial products such as over-the-counter derivatives and structured debt securities.
“The President’s Working Group has taken a thoughtful and judicious approach to many of the investor protection and systemic risk issues which surround hedge funds,” says Micah Green, co-CEO of SIFMA. “We appreciate the efforts of this broad group of US government agencies and we expect further study of their proposals.”
“Too often, regulators reach immediately for new laws or rules which can have the unintended consequence of stifling innovation or smothering markets,” adds Green. “By instead providing principles and guidelines, the President’s Working Group has recognized the importance of flexibility and efficiency in a healthy marketplace.”