The President’s Working Group on Financial Markets has released a set of voluntary guidelines for hedge funds and other “private pools of capital.”
The working group, an arm of the U.S. Treasury Department, decided to release the voluntary guidelines instead of developing a formal regulatory system for the hedge fund market.
The U.S. Securities and Exchange Commission has found in recent years that it lacks the statutory authority to take steps such as requiring hedge funds to give it a general description of their operations.
Treasury Secretary Henry Paulson is the chairman of the financial markets working group.
Other members include the chairmen of the SEC, the Federal Reserve Board and the Commodity Futures Trading Commission.
One of the group’s guiding principles for private pools of capital is that managers of the pools should “maintain and enhance information, valuation, and risk management systems to provide market participants with accurate, sufficient, and timely information.”
Regulators and other supervisors should “work together to communicate and use authority to ensure that supervisory expectations regarding counterparty risk management practices and market integrity are met,” officials say.
A copy of the principles document is on the Web at Document Link