The 'hurry up and wait' dynamic for 2008 financial regulation...

Fund of Hedge Funds New York: Regulatory agencies are concerned with hedge funds' ability to move markets, and the lack of transparency related to many funds' investments. This Fall's Global Alpha Forum will include a panel to look at hedge fund industry regulation. In advance of that, we wanted to take a look at what feels like the temporary change in the regulatory environment and what hedge funds are doing to prepare for 2009 and what could possibly be a year of regulatory change industry-wide. Opalesque also spoke with Andrew Shrimpton, of London based Kinetic Partners about the parallel holding pattern which hedge fund managers in the UK are also experiencing for industry regulation. Shrimpton will be one of the panelists discussing Global Hedge Fund Regulation at The Global Alpha Forum being held on September 16-18 in Greenwich Connecticut.

The regulatory holding pattern
As 2008 ramped up so, it seems did the credit crisis. But in the eye of the perfect storm of subprime, the rise in oil and commodity prices, and the fall of Bear Stearns there was a shift in the government's attention away from close inspection of the fundamentals of the economy and towards targeting the financial industry with further regulation. The clamoring for regulation took the form of plans to increase the US Federal Reserve's monitoring role, the CFTC launching a series of initiatives to review alleged commodity market manipulation, the SEC instating temporary limits to short selling, and The President's Working Group on Financial Markets forming to discuss hedge fund transparency. However, as the year and the credit crisis gained momentum so did the US political race and the focus on financial industry regulation seemed to fall into a holding pattern. Barring sudden further economic deterioration this holding pattern will likely last until the next administration enters office in January 2009.

As the US President's Working Group looked closely at hedge fund transparency, the UK Hedge Fund Working Group also reviewed hedge fund regulation. The result in the UK is the HFWG Standards, "originally created to head off the threat of further regulation," Shrimpton explains; a reaction to the German and French proposals for increased hedge fund regulation. UK hedge funds have until the end of 2008 to make the decision on whether or not to sign off on the Standards and commit to compliance. "The question now is whether or not people are going to sign up. Some are keen to do so, and others are quite hostile and don't see the need for it... managers will be making the decision over the next couple of months." Shrimpton believes that further regulation will be inevitable if the codes are not taken up across the board, but similar to the US - it seems as though......................

Source:
http://www.opalesque.com/AMB2008/46619The_up_and_dynamic_for.html


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