CFA Institute Centre calls for single global hedge fund standard

Date: Friday, December 14, 2007
Author: Hedgeweek.com

In its response to the Hedge Fund Working Group (HFWG) consultation paper, the London-based CFA Institute Centre for Financial Market Integrity expressed that it would like to see included in the construction of the HFWG standards support for a consistent set of global standards for the hedge funds industry and greater emphasis to address more fully the important areas of investor protection and the provision of ethical and professional conduct.

CFA Institute Centre welcomes the efforts of the HFWG in seeking to develop a self-regulatory template for the hedge fund industry. The Centre states, 'We believe this distinguished group is in a position to provide global leadership in creating a code process but it must include adequate consideration for investor protection and professional conduct if it is to address the concerns of those from outside of the hedge funds sector.'

An example of such higher professional standards were developed by the CFA Institute Centre and published as the Asset Manager Code of Professional Conduct (the 'Code').  This is a firm-wide Code that evolved from CFA Institute's Code of Ethics and Standards of Professional Conduct, which is annually re-affirmed by its members.   CFA Institute says it holds this document out to the HFWG as a set of global principles of professional conduct that could augment the ethical direction of the Consultation.

Commenting on the response, Charles Cronin, Head, CFA Institute Centre, EMEA says, 'We need a consistent set of global standards for hedge fund practices.  We would encourage the HFWG to join others in working toward a single 'global' standard reflecting consistent adherence to a full set of professional and ethical principles. This would include reconsideration of whether the 'comply or explain' approach would contradict the goal of having a consistent and comparable standard.'

'One important example of how to effectively address that issue are the Global Investment Performance standards (GIPS®), which are now recognised as the industry standard in 28 countries including the UK, precisely because they are rigorous, require full adoption, and provide a consistent benchmark of comparison. The GIPS have become globally endorsed by the investment management industry and its stakeholders. There is no reason why the hedge fund industry should not aim for a similar solution.'

Alan Brown Chairman of the CFA Centre Advisory Council and Group Chief Investment Officer, Schroder Investment Management Limited says, 'The industry now has several competing sets of standards from AIMA, MFA, UAE, HFWG, CFA Institute and soon a set of proposals from the US Treasury to navigate. We don't need six rulebooks. Creating a single global standard for Hedge Funds to address the key issues of stakeholders would be a pragmatic step forward for all.'