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: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this race. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.