The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

AIMA Welcomes Financial Stability Forum Hedge Fund Report

21 May 2007

London, 21 May 2007: The Alternative Investment Management Association (“AIMA”) has warmly welcomed the Financial Stability Forum’s (“FSF”) report on potential financial system risks relating to hedge funds and its recommendations in relation to the ongoing supervision of hedge funds and their counterparties.

The FSF report, published at the weekend, recognises the contribution hedge funds have made to financial innovation and market liquidity and notes heightened risk measurement, valuation and operational challenges for market participants.

AIMA continues to support increased disclosure of information between hedge funds, their counterparties and, in turn, between counterparties and regulators.

In this respect AIMA also welcomes the US Federal Reserve’s Chairman, Ben Bernanke’s comments from last week encouraging the move towards efficient and principles based regulations as those promoted by the UK’s Financial Services Authority - seen by many as the leading hedge fund regulator worldwide.  AIMA also agrees that greater cooperation between regulators would be a welcome step towards increased market discipline and more efficient global supervision of all financial markets.

Florence Lombard, Executive Director at AIMA said: “AIMA fully supports the FSF’s recommendations that the global hedge fund industry should review and enhance existing sound practices. AIMA has been striving for many years now to provide hedge funds, their investors and regulators with sound practices.  AIMA is committed to working together with its members and the relevant regulatory authorities to provide additional guidance where necessary.

AIMA is due this week to publish its revised guide to sound practices for European hedge fund managers. This follows the mid-March publication of its guide to sound practices for hedge fund valuation.

The FSF’s five recommendations include:

  • Supervisors should act so that core intermediaries continue to strengthen their counterparty risk management practices.
  • Supervisors should work with core intermediaries to further improve their robustness to the potential erosion of market liquidity.
  • Supervisors should explore and evaluate the extent to which developing more systematic and consistent data on core intermediaries’ consolidated counterparty exposures to hedge funds would be an effective complement to existing supervisory efforts.
  • Counterparties and investors should act to strengthen the effectiveness of market discipline, including by obtaining accurate and timely portfolio valuations and risk information.
  • The global hedge fund industry should review and enhance existing sound practice benchmarks for hedge fund managers in the light of expectations for improved practices set out by the official and private sectors

- Ends -

For further information, please contact:
Eoin Brophy
Hume Brophy Communications
Tel: +44 (0)20 7499 8736
Mob: +353 86 851 5477

Editors’ Notes

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

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