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SEC chair Gensler flags greater scrutiny of hedge fund activity

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Securities and Exchange Commission chair Gary Gensler says hedge funds must face closer scrutiny following the recent turmoil in US government bonds, according to a story by the Financial Times.

With regulators having focused largely on the investment bank sector in the aftermath of the 2008 Global Financial Crisis, Gensler believes taming the risks stemming from speculative funds and other non-bank financial institutions was now “more important than ever.”

He said he wanted a better understanding of how bets by often highly-levered asset managers, including hedge funds, can reverberate across asset classes and into the real economy.

“We just had Treasury yields move more significantly than they had in 35 years in three days in mid-March,” Gensler said of the recent bond market rally sparked by the Silicon Valley Bank collapse.  “When you have that, it’s appropriate as a capital markets regulator to talk to folks and see whether that risk… propagates out.”

 As well as initiating such contacts, the SEC can also propose forcing market participants to increase disclosure of their activities.

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