MARCH 30, 2009
Hedge fund's seem very nervous about the upcoming G20 summit in London.
So nervous in fact that in a rare sign of unity in this often fragmented space three of the most prominent
industry groups have committed to work towards a global hedge fund standard via a letter to the Financial Stability Forum. The three groups are:
1) Alternative Investment Management Association (AIMA)
2) President's Working Group (aka Plunge Protection Team)
3) Managed Funds Association
The AIMA plan seems to mirror the Financial Services Authority model - so once again it appeared as if the U.S. SEC would be left trailing the rest of the world, but then U.S. President Obama stepped in to state that the U.S. would not lag behind European efforts. Even in times of unity there appears to be discord and the Hedge Fund Standards Board (a European group trying to make its methodology the standard) is still absent as yet.
Within the G20 itself there is a lack of agreement on exactly how to regulate hedge funds. The French government reportedly has referred to the issue as a, "philosophical debate." Like the original incarnations of Tim Geitner's plan, specifics are still lacking from industry organization plans and will likely be filled in by the G20 itself.
The broader hedge fund community voicing its opinion to embrace regulation is commendable if even slightly disingenuous.
Hedge funds will be reregulated and it appears now that the hedge fund community has come to terms with this
and is jumping on the bandwagon lest it appear to be uncooperative and fall prey to an unsympathetic, heavy handed regulatory regime.
If hedge funds are so in favor of regulation why is the industry so quick to react to news of G20 regulation both with the US and abroad? Is it simply fear of the unknown or perhaps a desire to prevent regulating the industry out of existence?
My guess is the answer falls somewhere in-between.
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