The Myth of Hedge Fund Under-Regulation
Nov 24th, 2006 | Filed under: Hedge Fund RegulationSyndication of US media stories to foreign publications can fuel misconception about the state of local regulations. For example, with stories like this in the International Herald Tribune, Europeans would be excused for thinking the hedge fund industry was under-regulated in Europe. But the reality seems to be that – according to regulators themselves – the European (and Canadian) hedge fund industries are well regulated.
Last week, a high-ranking Canadian securities regulator suggested that the Canadian industry was actually well regulated.
Now a European Official has followed suit. Charlie McCreevy, the European Commission’s Internal Markets Commissioner told the Institute for European Affairs this week that:
“…it is a myth that European hedge funds are not regulated. In the European Union, hedge fund managers, administrators and products are subject to wide-ranging national regulatory requirements.”
Even Canada’s central bank has poured water on the well-worn argument that hedge funds are “unregulated”. Bank of Canada Deputy Governor David Longworth was recently quoted by Bloomberg as saying:
“Hedge funds have had a largely positive impact on the efficiency of financial markets in Canada. There appears to be no reason to sound the alarm.”
The Ontario Securities Commission’s Paul Moore - a leading Canadian regulator – probably has the best theory on why so many people in Canada assume the hedge fund industry is entirely unregulated. As the National Post reports:
“The Canadian public may be confused because the regulatory environment is not comparable to that in the United States, where hedge fund portfolio managers are not registered, Mr. Moore said.”
With world hedge fund media seemingly obsessed with the state of US regulations, it’s no wonder so many non-American investors can’t get an accurate perspective on their own domestic situation.
- Alpha Male
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