Alternative Investment Management Association
29 November 2006
London, 29 November 2006: AIMA, the global trade association for hedge funds has responded to Deutsche Bundesbank Financial Stability Review 2006, published yesterday.
AIMA was disappointed to read the Bundesbank’s comments in its 2006 Financial Stability Review, that hedge fund activities pose a risk to the financial sector.
The Review failed to reflect on the increased levels of corporate governance from which hedge funds now benefit. Hedge fund managers – and in some instances, funds - are regulated throughout Europe and their standard of governance is high, a point endorsed last week by Charles McCreevy, the European Commissioner for Internal Markets and Services.
Indeed he commented that, in addition to direct regulation, hedge fund managers are also subject to the market disciplines enforced by hedge fund counterparties such as prime brokers, which are EC regulated banks, including some regulated by the Bundesbank itself. In addition, the growth of institutional investment into hedge funds has brought even higher levels of due diligence as investing institutions, such as pension funds, assess how hedge fund management companies are run as well and their fund’s investment performance.
The Bundesbank in its Review has recognised that, following a large US hedge fund experiencing major losses in September, the financial system absorbed its impact. It is important to note that the European hedge fund industry has not experienced such an event.
Contrary to the Bundesbank’ s conclusion, this shows that the risk management systems of hedge fund counterparties – including prime brokers – have improved dramatically in recent years. Therefore the Bundesbank may be exaggerating the risks imposed by hedge funds on the stability of financial markets.
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For further information, please contact Eoin Brophy, Hume Brophy Communications on +44 (0)20 7499 8736
1. About AIMA
As the only truly representative global hedge fund association, AIMA, the Alternative Investment Management Association, has over 1,100 corporate members worldwide, based in 47 countries.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators, worldwide.
AIMA is a dynamic organisation that reflects its membership’s interests and provides them with a vibrant global network.
AIMA is committed to developing industry skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists.
For further information, please visit AIMA’s website www.aima.org.