The heads of the major US financial regulatory agencies on Monday raised concerns about a concentration of leverage in large hedge funds and called for a working group to collect and analyse data on the privately held firms in a report on asset management.
But the Financial Stability Oversight Council, tasked with finding and reducing systemic risk, did not designate any asset managers as "systematically important" - a move that could ease concerns that have gripped the fund industry for years.
In a public meeting late on Monday, the regulatory group, including the US Treasury secretary and chair of the Securities and Exchange Commission, updated its two-year-old review of risks to the US financial system posed by hedge, mutual and other funds' liquidity, leverage and redemptions.
One FSOC senior official said the update narrowed the focus of that review.
Meanwhile, it set the stage for a limited review of hedge fund risk, noting it was "constrained by limitations in the available data."
The working group, largely made up of staffers of member agencies, will report by year-end on items including counterparty exposures, margin investing, trading strategies and possible standards for measuring leverage.
The council also took a light stance on addressing liquidity and redemption risks, saying it would also wait to see how the SEC implements funds rules proposed nearly a year ago.
The council will "review and consider whether risks to financial stability remain," it said, adding it "will take into account how the industry may evolve in light of any regulatory changes." It also suggested certain steps that "should be considered" in how funds handle illiquid assets, redemption costs, and financing.
The SEC proposed requiring mutual funds and exchange-traded funds to set up programs for managing liquidity risks and broaden disclosures about their liquidity and redemption practices.
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But the Financial Stability Oversight Council, tasked with finding and reducing systemic risk, did not designate any asset managers as "systematically important" - a move that could ease concerns that have gripped the fund industry for years.
In a public meeting late on Monday, the regulatory group, including the US Treasury secretary and chair of the Securities and Exchange Commission, updated its two-year-old review of risks to the US financial system posed by hedge, mutual and other funds' liquidity, leverage and redemptions.
One FSOC senior official said the update narrowed the focus of that review.
Meanwhile, it set the stage for a limited review of hedge fund risk, noting it was "constrained by limitations in the available data."
The working group, largely made up of staffers of member agencies, will report by year-end on items including counterparty exposures, margin investing, trading strategies and possible standards for measuring leverage.
The council also took a light stance on addressing liquidity and redemption risks, saying it would also wait to see how the SEC implements funds rules proposed nearly a year ago.
The council will "review and consider whether risks to financial stability remain," it said, adding it "will take into account how the industry may evolve in light of any regulatory changes." It also suggested certain steps that "should be considered" in how funds handle illiquid assets, redemption costs, and financing.
The SEC proposed requiring mutual funds and exchange-traded funds to set up programs for managing liquidity risks and broaden disclosures about their liquidity and redemption practices.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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