The U.K.’s Financial Services Authority is adding private equity to its monitoring activity, along the same lines of what it’s doing for hedge funds. The British regulator, in publishing a discussion paper on the impact of the growth of private equity on the U.K.’s wholesale markets, is planning to establish “an alternative investments centre of expertise” by integrating private equity firms and supervision staff into the existing hedge fund managers supervision team and will continue “its proactive monitoring of institutional leverage and credit markets.” Hector Sants, the FSA’s managing director of Wholesale Markets and Institutions, said in a statement that the growth of p.e. over the past few years, “poses challenges, not just for the FSA, but all regulators charged with oversight to international capital markets.” The discussion paper indicates that the agency may be undertaking “some potential additional data gathering” and proposal for increasing co-operation with trade associates and “targeted thematic work.” Sants expressed a regulatory desire similar to that other U.K. officials have expressed regarding hedge funds: “Too much regulation can be detrimental to capital market efficiency, but too little regulation can damage market confidence.”
