|
|
The Commission release a feedback document on the 104 contributions received on the consultation on hedge funds.
The principal messages and issues highlight that hedge funds represent a very heterogeneous class of asset and investment strategies and are best reserved for sophisticated investors. There are inherent difficulties to be overcome in designing an operational regulatory response that avoids a 'one size fits all' solution.
Most respondents believed that an international or global response would be superior to an EU response. However, a small majority of respondents believe that it is nevertheless appropriate to come forward with EU level action.
A considerable number of respondents see concerns ranging from the need for more effective monitoring of hedge fund impacts on financial stability and market efficiency, through risk management systems, organisational arrangements and use of particular investment techniques (e.g. short-selling).
Much comment centred on the impact of hedge funds on financial stability. Various respondents observed that supervision of hedge fund counterparties does not protect financial markets from cyclical impacts of herding behaviour by hedge funds, hedge fund trading concentrations in particular market segments and deleveraging. Recent developments have revealed the capacity for hedge funds to impact overall market functioning through the market channel, i.e. through impacts on market prices and liquidity.
62% of respondents (to this question) believe that supervisors and macro-prudential authorities should be provided with more information on hedge funds to monitor the systemic effect their activities may have on EU/global markets.