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Kinetic Partners welcomes FSA hedge fund risk survey

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Kinetic Partners has welcomed the results of a survey by the UK Financial Services Authority which found that hedge funds do not pose a potentially destabilising credit counterparty risk across the surveyed banks.

The survey also found that there is a relatively low level of leverage under the FSA’s various measures across the 50 hedge funds surveyed.

Kinetic says this demonstrates that hedge funds are generally not exposed to any more risk than a fund managed by the traditional sector. It believes that it is inappropriate for members of the EU to single out hedge funds as being responsible for the recent financial crisis.

The Spanish EU Council presidency’s recent interventions on the draft Alternative Investment Fund Managers Directive further demonstrates the complete lack of understanding of hedge funds by a majority of onshore EU member states, says Kinetic.

Andrew Shrimpton, a member at Kinetic Partners, adds: “By showing how widely fund leverage figures can differ, depending on the measurement approach used, the above mentioned surveys demonstrate how simplistic and unworkable it will be for the European Commission to impose hard caps on fund leverage under the Alternative Investment Fund Managers’ Directive.”

The survey will be carried out at six monthly intervals will identify whether hedge fund managers pose a systemic risk either individually or collectively.

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