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What influence? Top Hedge Funds Control Just 1%

Date: Wednesday, February 24, 2010
Author: WSJ

Worries that hedge funds have undue influence in share trading look overblown after a Tuesday report from the U.K. Financial Services Authority found that 50 of the U.K.'s largest hedge-fund groups control less than 1% of the European stock market. The FSA data, part of a broader survey to assess the possible systemic risks posed by hedge funds, show that only 0.9% of the total value of European company shares is held by the firms surveyed. The measure was based on funds' long and short exposures to stocks, including those made with derivatives.

The 50 firms in the survey represent roughly $300 billion, or 20%, of the world's hedge-fund assets, and include large U.S. groups with London offices as well as U.K.-based firms such as Brevan Howard Asset Management LLP and GLG Partners Inc. The survey, taken in October, is the first in what is to become a six-month exercise by the FSA to keep a closer eye on hedge funds' activities. It already runs a survey every six months on banks' counterparty risk with hedge funds.