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AIMA puts positive spin on G20 outcome

Date: Friday, April 3, 2009
Author: HedgeFunds Review

The significant commitment to financial stability given by the Group of 20 at the close of the London summit has been welcomed by AIMA (the Alternative Investment Management Association).

"We welcome the new Financial Stability Board and look forward to working as closely with it as we have with its predecessor, the Financial Stability Forum," commented Andrew Baker, CEO of AIMA.

He emphasised that AIMA, which represents the global hedge fund industry, is "determined to do everything we can to assist international policy makers in preventing systemic instability in the future and the most important way we can do that is through the provision of information."

He also said if policy makers can get a better sense of concentrations of risk in global financial markets through improved information, then they will be better placed to prevent future instability.

AIMA has already started its supported the provision of systemically significant information by large hedge fund managers to their national regulators. A policy platform announced by the group in February outlined its support for a global manager authorisation-supervision template (news article, February 24, 2009).

AIMA has also taken the lead on behalf of the hedge fund industry globally.

Agreeing with the Turner Report (published by the UK Financial Services Authority), which said hedge funds in general are not today bank-like in their activities" Baker added a note of caution. "Although we agree that any entity that provides banking services should be regulated as a bank, the vast majority of hedge funds do not fall into this category," he said.

"We think that there is increasing awareness that our industry can play a positive role in assisting the recovery because of the willingness of hedge funds to provide counter-cyclical risk capital," Baker added. "The US has taken the lead in this respect with the Public-Private Investment Program and we hope that other countries will follow this lead."

In a separate statement the Managed Funds Association (MFA) president and CEO Richard Baker, also welcomed G20 actions. "Financial system stability and the restoration of investor confidence are at the top of MFA's agenda," he said. "MFA is committed to working with policy makers to ensure that smart regulatory reforms are constructed to help re-build investor trust and protect the integrity of the markets.

"Hedge funds, whose investors have been negatively impacted by the turmoil in the financial markets, have a shared interest with other market participants and policy makers in re-establishing orderly, stable markets. Hedge funds have a strong role in helping to hasten economic recovery as liquidity providers, risk dispersers and as a source of capital for businesses hoping to grow and create new jobs," Baker noted.

He also pointed out that the industry is taking steps to restore investor trust through the promotion of sound business practices and tools for investors (news article, April 2, 2009).

MFA represents US professionals in hedge funds, funds of funds and managed futures funds, as well as industry service providers.

AIMA and MFA agreed in 2008 to work together on "issues of common interest such as the adoption of a global, principles-based regulatory system"(news article, April 10, 2008).