Hedge funds have won praise from Brian Magnus for their positive role in expediting cross-border mergers and acquisitions, and their general impact on the financial markets. Speaking at the Reuters Hedge Fund and Private Equity Summit, the co-head of Morgan Stanley's U.K. investment banking operations opined that "hedge funds are a big help. They play a role as makers of efficient markets." He went on to say that, now that hedge funds play the intermediary and price risk, cross-border dealers are much easier than in the days of flow-back of the acquirer's shares. On a different note, he acknowledged that hedge funds are taking on private equity-like roles but doesn't see a blurring of the two investments.
At the same time, however, the European Union has expressed concern that its member states' regulators are not prepared for financial crises that may arise from the increasing use of hedge funds and private equity. In a report to be discussed at a meeting of finance ministers and central bankers in Vienna next week, the EU recognizes the contributions of hedge funds to market efficiency, but also that they "can be a source of systemic risk." Same goes for private equity, according to the report, cited by Bloomberg News, because of its "illiquidity and lack of transparency."
At the same time, however, the European Union has expressed concern that its member states' regulators are not prepared for financial crises that may arise from the increasing use of hedge funds and private equity. In a report to be discussed at a meeting of finance ministers and central bankers in Vienna next week, the EU recognizes the contributions of hedge funds to market efficiency, but also that they "can be a source of systemic risk." Same goes for private equity, according to the report, cited by Bloomberg News, because of its "illiquidity and lack of transparency."
