German Finance Minister Peer Steinbrueck welcomed on June 20 an initiative by the trillion-dollar hedge fund sector for increased transparency, saying that such a move had only come about thanks to Germany's persistence. In a statement issued by 13 funds -- including sector giants such as Brevan, Howard, Centaurus, GLC, Man Group and Marshall Wace -- on June 19, the investment firms said a working party would be set up under former Bank of England deputy Andrew Large, to examine a possible voluntary code of conduct. "The group will complete its work at the beginning of 2008," the statement said
At the recent Group of Eight summit in Heiligendamm, host country Germany had failed to win support among the world's richest countries for regulation of the fast-growing and increasingly powerful hedge fund industry. Germany has put hedge funds on top of the agenda of its year-long G8 presidency given its concerns that rapid growth in the increasingly powerful sector could destabilize the entire global financial system.
Hedge funds are highly speculative and aggressive investment instruments that are estimated to manage close to $1.5 trillion in assets worldwide. An estimated 9,000 such funds are currently in operation, most of them based in the U.S. and Britain.
Berlin fears a possible domino effect should one of the big funds fail. But it has been gradually forced to scale back its ambitions for increased transparency and more disclosure in the sector in the face of fierce resistance, particularly from Britain, the U.S. and Japan.
Copyright Agence France-Presse, 2007