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2010-09-20 12:27:25

Obama Government is Pushing Ahead With Hedge Fund Regulatory Laws

<p>The Obama <a href="">government</a> is pushing ahead with  hedge fund regulatory laws – the draft being unveiled on Wednesday 15th July  2009. It will make it mandatory for all the hedge funds with assets above $30  million to register with Securities and Exchange Commission.</p>
<p>This one step will bring to an end decades  of independence enjoyed by hedge funds. So far it had been free from regulatory  supervision but from now on more stringent measures will be taken than had been  anticipated in this alternative group dealing with investments. One will be  “quite tough” capital conditions to put and end to jumbo funds “gambling with  their size.”</p>
<p>Michael Barr the Treasury Assistant  Secretary for Financial Institutions while speaking at the Exchequer Club on  Wednesday 15th July 2009 at Washington said, that “sweeping reforms” would be  brought about in the <a href="">financial</a> area. The hedge fund legislation that had been  sent to Congress would be vigorously followed up. Barr said, “To protect  <a href="">investors</a>, under our proposal, hedge fund advisers will be registered with the  SEC for the first time and will be required to disclose to regulators and  investors more information about the characteristics of their advised hedge  funds - including asset size, borrowings, off-balance sheet exposure and other  matters.”</p>
<p>Hedge funds have regularly been considered  important because of either their bulk or the amount of their dealings with the  financial system. Now they will have to submit to strict regulatory standards  and supervision.</p>
<p>These hedge funds will be controlled as  “Tier 1 Financial Holding Companies” according to Barr. He said, “These firms  will face appropriate prudential requirements regarding capital, liquidity, and  risk management.” The Tier 1 companies will be subjected to the rules laid down  by USA Federal Reserve and also SEC.</p>
<p>Barr explained that the capital conditions  of these companies would be extremely tough. The suggested regulation would  prevent and “counteract any incentive for the largest firms gambling with their  size.”</p>
<p>The hedge funds had not been the focus of  the present financial mayhem said Barr but their delivering and lack of clarity  has raised questions and it is thought that these funds have contributed  largely to the disorder in the <a href="">market</a> that is now being witnessed. Barr  explained, “These firms continue to present unknown risks, and that lack of  transparency is no longer tenable. We need a system that’s flexible enough to  adapt to the emergence of other institutions that could pose a risk to the  system. And we need a system that lets regulators see risks as they emerge  across the financial system.”</p>

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