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: Jim Hamilton's World of Securities Regulation

By Jim Hamilton

Hedge Fund Standards Board Charts Path to Int'l Best Practices

The Hedge Fund Standards Board has named Antonio Borges as its first permanent chairman, with a goal to harmonize international standards for hedge funds. He is a former Vice Governor of the central bank of Portugal. A permanent board of trustees for the standards board was also named, including major hedge fund investors, sovereign wealth fund executives, a UK pension fund manager and the former Calpers chief investment officer.

The board was formed in January 2008 to take forward the work started by the Hedge Fund Working Group, whose report on best practices for hedge fund managers was published that month. One of the board?s major goals is to harmonize its best practice standards with those being developed in the US by the President?s Working Group on the Financial Markets so that a set of international best practices for hedge funds can become a reality.

Because of their size and their innovation, noted Chairman Borges, hedge funds have become a critical part of the financial system. Thus, it is very important that managers adhere to standards that give confidence to investors and financial regulators. Earlier, the board had praised the best practices set forth in April by the President?s Working Group, stating that they share much common ground with the board?s best practices for hedge fund managers.

In addition, the board welcomed the working group?s best practices for hedge fund investors. Similarly, the board has praised the decision by the Bundesverband Alternative Investments (BAI) to recommend that institutional investors take account of the board?s best practices when investing in hedge funds.

The BAI, the German hedge fund trade association, issued revised guidelines to investors on the due diligence they should conduct into hedge funds and fund of hedge funds. The guidelines take the form of standardized questionnaires to help investors systematically assess hedge funds. Among other things, the BAI recommends that institutional investors ask hedge fund managers if they are conforming to the board?s standards.

Full post as published by Jim Hamilton's World of Securities Regulation on June 27, 2008 (boomark / email).