The Chairman of the Financial Stability Forum (FSF), Mario Draghi, made the following statement in response to the release today of the Hedge Fund Working Group’s Hedge Fund Standards: Final Report.
"As FSF chair, I welcome the issuance today of the Hedge Fund Working Group’s best practice standards. The report represents an important step towards improved disclosure practices and market discipline in this sector. As such, the standards can play a role in helping to enhance resilience and mitigate systemic risk.
This initiative, together with the parallel work to develop best practices by a committee established by the US President’s Working Group on Financial Markets, takes forward one of the recommendations that the FSF made in its Update on Highly Leveraged Institutions in May 2007, namely that the global hedge fund industry should review and enhance existing sound practice benchmarks for hedge fund managers in the light of expectations for improved practices set out by the official and private sectors.
I welcome in particular the Hedge Fund Working Group’s recognition that setting the standards needs to be the beginning, rather than the end, of a process. The “comply or explain” expectation on hedge fund managers, the planned establishment of a Hedge Fund Standards Board to maintain the standards and report on conformity by the industry, and the recommendation that this Board should consider areas of convergence with the parallel initiative of the US President’s Working Group, are all useful further steps that can help to ensure that the issuance of standards will translate into enhanced practices globally."
