Sunday, 23 November 2014
Last updated 2 days ago
Feb 22 2011 | 11:25am ET
A draft report from a powerful new federal regulator indicates that the alternative investments industry could find itself facing tougher regulations than previously feared.
According to the report, being prepared by the Financial Stability Oversight Council, hedge funds and private equity firms could pose a systemic risk to the financial system. The draft says that massive hedge redemptions could "cause activity in some markets to freeze" and expressed concern that the "highly leveraged nature of" private equity firms' "portfolio companies and their use of bridge loans" could also pose risks.
The draft report, obtained by Bloomberg News, offers a glimpse into how the FSOC and Federal Reserve will decide which non-bank firms are systemically important and which are not. Those that get the dreaded label will find themselves under the thumb of the two regulators, which are empowered to force firms to raise capital, boost liquidity and sell assets.
The FSOC report also details the sort of information it might make alternative investment firms provide to better monitor them, including their value-on-risk ratio, some of which they have not been previously required to provide.
The hedge fund industry has bitterly opposed the notion that any hedge fund poses a systemic risk to the economy.
The FSOC is set to begin determining the systemic importance of firms by the middle of the year.
Nov 4 2014 | 9:45am ET
Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…
Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...