Transparency requirements and hedge funds.

Abstract

Regulation of any financial institution or asset class should refl ect the regulatory objectives which are relevant to the institution or asset class. This paper identifies the relevant regulatory objectives in respect of hedge funds as market confidence and financial stability, market integrity and consumer protection. Against these objectives, the paper examines what information should – and should not – be provided by hedge fund managers to: • investors • creditors and counterparties • the general public • regulators It also describes the work carried out by the Financial Services Authority (FSA), in the context of its market confidence and financial stability objective, to survey large dealers’ exposure to hedge funds and the risk-based supervision of UK hedge fund managers carried out by the FSA in the United Kingdom.