Global Regulatory Task Force Recommends Registration of Hedge Funds and Their Managers
A Task Force established by IOSCO (a multi-national group of regulators) has recommended sweeping and consistent regulation of hedge funds. Departing from prior statements, the Task Force calls for government regulations and not just recommended compliance with industry best practices. The Task Force recommends that all securities regulators require registration of hedge fund managers and the funds themselves, which would include the initial and ongoing delivery of information to ensure transparency, thereby allowing regulators to manage risk. The Task Force also calls for enhanced regulation of banks and brokers that serve as counterparties and prime brokers. Additionally, the Task Force recommends cross-border information sharing among regulators.
OUR TAKE: The U.S. currently has one of the weakest regulatory regimes with respect to hedge funds. In our view, the Task Force is directing its comments at the U.S. and at the offshore fund jurisdictions. We believe that registration of hedge fund managers is likely and that the registration of hedge funds is very possible.