The London Stock Exchange uses cookies to improve its website. The cookies for analytical purposes have already been set. For more details and how to manage cookies, please see our privacy and cookies policy.

February 2009


Response to the European Commission consultation on hedge funds

The Exchange has responded to the European Commission consultation on hedge funds. Whilst recognising that there is a need to examine vulnerabilities in the global financial system, there is also the need to avoid the temptation to over-regulate specific areas of the financial markets where there is little material evidence of market failure but where inappropriate and hurried regulatory intervention may damage the long term efficacy of public capital markets.

We do not consider that this consultation provides sufficient empirical analysis to justify change, and we would urge the commission to conduct a more thorough market analysis on which to base its policy recommendations.

Finally, we note that the colloquial use of the term ‘hedge fund’ has created a perception that such funds are synonymous with high risk and high volatility, when the very purpose of such funds is actually to minimise both. This is an important point to note when considering that institutional investors who use hedging techniques to control risk and manage volatility, such as pension funds, are ultimately representing the interests of their underlying, retail investors. An unintended consequence of enacting inappropriate regulation in the area of hedge funds may be to hurt the prospects of the very type of investor the Commission would ultimately prefer to protect.

Downloads
London Stock Exchange response to hedge funds consultation (pdffile pdf - 68 KB)

The Exchange accepts no responsibility for the content of the website you are now accessing or for any reliance placed by you or any person on the information contained on it.

By allowing this link the Exchange does not intend in any country, directly or indirectly, to solicit business or offer any securities to any person.

You will be redirected in five seconds.

You are accessing the London Stock Exchange Annual Report Service powered by PrecisionIR.

The Exchange accepts no responsibility for the content of the reports you are now accessing or for any reliance placed by you or any person on the information contained therein.

By allowing this link the Exchange does not intend in any country, directly or indirectly, to solicit business or offer any securities to any person.

You will be redirected in five seconds