The International Organization of Securities Commissioners has decided to take a new look at funds of hedge funds in light of the $6 billion in losses at Amaranth Advisors. That pronouncement came at meeting of global regulators from Hubert Reynier, chairman of the IOSCO Standing Committee-5, which is charged with studying administration, valuation and transparency in alternative investments in advance of the group’s annual meeting in April. “The aim is to produce a set of standards to make sure that hedge fund valuations can be done to match regulatory standards worldwide,” according to IOSCO. That is pretty tall task, given IOSCO membership consists of members from more than 100 regulatory agencies worldwide, including the U.S. Securities and Exchange Commission and the U.K. Financial Services Authority. Add to the mix the fact that there is a wide variety of alternative investments and structures, and that magnifies the difficulty in coming up with standards that all can live by.
On that point, U.K. Treasury Minister Ed Balls got the matter rolling by declaring that his country’s HF manager supervising regime is “as effective and probably more demanding than other financial centers.” Stanley Fink, outgoing chairman of Man Group, says, “Well-thought-out regulation is a good thing,” but noted, “If the industry tried to take the lead, the different business models among funds would make (agreement) very hard. It is very necessary to work with regulators.”