British Regulators Say Hedge Funds Not To Blame

Nov 21 2007 | 8:11am ET

Hedge funds are not to blame for this summer’s credit crisis, and have dealt with it more effectively than other financial institutions, two top British regulators have said.

Hector Sants, the CEO of the Financial Services Authority, told a conference in London that “hedge funds were not the catalysts or drivers of this summer’s events.” And John Gieve, deputy governor of the Bank of England in charge of financial stability, noted that “hedge funds have not been blown away by the first signs of real market stress, as some commentators thought they would be.”

Gieve said that the fact that hedge funds have become less prominent in the credit crisis, while Wall Street giants and other banks, including Britain’s Northern Rock, have taken center stage, shows that they have been able to adjust to the circumstances.

For his part, Sants suggested that hedge funds should reconsider their models and improve stress-testing, as well as investigate how to improve counterparty risks, in light of this summer’s situation. But he warns that the FSA will take the opportunity to probe illicit activity.

“Recent instability provides the ideal environment for rumors to be spread and for market abuse,” Sants said. “The reduction of market abuse remains a focus of the FSA.”


In Depth

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

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

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.