US and UK regulators agree to work together on hedge funds

Date: Thursday, September 17, 2009
Author: James Quinn, Telegraph

The Financial Services Authority has agreed to work with the Securities and Exchange Commission, the leading US financial regulator, in an effort to better regulate the work of cross-border hedge funds.

The City watchdog has agreed with the SEC to move towards a common reporting platform for hedge funds and their advisers, as well as looking at the potential for shared regulatory requirements.

The two regulators, meeting ahead of next week's G20 summit, where regulation of the financial industry will be high on the agenda, also agreed to identify a set of common data to collect from the hedge fund industry in order to be able to better monitor the risks involved.

The commitment to work together on hedge funds was the main outcome of a meeting between FSA chief executive Hector Sants and his counterpart at the SEC, chairman Mary Schapiro.

"The global crisis has underlined how intertwined financial markets and institutions are and regulators around the world have to work together to ensure appropriate oversight," said Mr Sants, calling the discussions with the SEC "valuable."

The pair also discussed the thorny subject of over-counter-derivatives and central clearing as well as corporate governance and compensation practices.

Both regulators are members of the Financial Stability Board, which earlier this week said it intends to submit guidelines to the G20 suggesting banks with low levels of capital should not be allowed to pay large bonuses.

Mr Sants also met with the head of the Commodities Futures Trading Commission, with which the FSA has agreed to share information on oil contracts.