G7 Offers Vigilance, But No Regulation

Feb 12 2007 | 10:45am ET

G7 finance ministers promised “vigilance” in monitoring and dealing with risks to the global economy posed by hedge funds, but not much else in terms of regulating them.

At the close of a two-day meeting in Essen, Germany, the ministers acknowledged that hedge funds and derivatives “have contributed significantly to the efficiency of the financial system” and that the growth of hedge funds has made risk assessment “more complex and challenging.” But U.S. Treasury Secretary Henry Paulson left the meetings Saturday with his skepticism of the need for more stringent regulation intact.

Paulson, the former CEO of Goldman Sachs, told reporters after the conference that a thriving hedge fund industry “is in the U.S. interest,” adding, “Market discipline, focusing on risk management of regulated counterparties, is the most effective way to address potential systemic risk concerns.”

But his fellow reguskeptic, British Chancellor of the Exchequer Gordon Brown, sounds more open to the prospect than in the past. A government source told Reuters that the U.K. is encouraged by Germany’s softer line at the conference—dropping the pejorative “locusts” and watering down its regulatory dreams to push a voluntary code of conduct.

The source said that the Treasury is “never complacent about risk” and is “happy to cooperate with international efforts aimed at improving our understanding of risk, but will resist any blanket approach.” The source also said that the U.K. would back a study of risks posed by hedge funds likely to be conducted by the Financial Stability Forum.

Paulson also pointed to the need for more information as he left Essen, noting that a U.S. working group will issue its own report on regulation “in the relatively near future.”


In Depth

Q&A: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Demeter: Family affair

David and James Hamman launched their fundamental Livestock and Grains Program in March of 2010 but it really was decades in the making.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.