With $1.7 trillion in assets, hedge funds are among the most powerful in the financial market, which has raised concerns among financial regulators who think the risky trading strategies used are a threat to the stability of the financial system.
A voluntary code of conduct by the hedge fund industry would be a first step toward better oversight of the fast-growing section, Alex Weber, a member of the European Central Bank Governing Council told Reuters. Whether hedge funds take the matter into their own hands or not, the transparency of the market will be discussed internationally at this years G8 summit. The issue has topped Germany’s list of proposed topics.
The state of the industry has created concerns about energy costs, the US dollar and cheap cash. All of which are seen as a threat to the world economy, says Weber. But, there is still a vast disagreement on how to get hedge funds to disclose information about their private investment holdings.