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Market Risk - AIMA Responds to the G7 Approach to Hedge Funds

Date: Wednesday, February 14, 2007
Author: Gordon McAra (London, UK), RiskCenter

The Alternative Investment Management Association (AIMA), a global hedge fund and alternative investment industry association has responded to the statement on hedge funds following the G7 Finance Ministers Meeting in Essen on 9/10 February 2007.

AIMA welcomed the statement that hedge funds have contributed significantly to the efficiency of the financial system. Nonetheless, AIMA also recognises that G7 members need to have better understanding on hedge fund trading activity.

AIMA has highlighted that European and Asian hedge funds managers and their counterparties operate under full authorisation and supervision of the leading international regulatory authorities such as the UK Financial Services Authority, the Autorité des Marchés Financiers in France and the Securities and Futures Commission in Hong Kong, among others.

AIMA has pointed out that hedge fund managers are already sharing information and data with these regulators – who have not expressed specific concerns nor backed up calls for further disclosure. Additionally European managers already have to comply with a multitude of European wide regulations such as MiFID and CAD2.

The G7 statement has referred to the possible development of a voluntary code of conduct. AIMA believes that such an idea has neither relevance nor meaning in this context of existing regulations.

AIMA would welcome the opportunity to contribute to an update of the 2000 report on Highly Leveraged Institutions by the Financial Stability Forum – AIMA has also noted that the original report, whilst relating to the collapse of Long Term Capital Management in 1998, also focused on other market participants aside from the hedge fund industry.