INTERNATIONAL: IOSCO Report on Second Hedge Fund Survey

Monday October 21 2013

The International Organization of Securities Commissions (IOSCO) has published a Report on the Second IOSCO Hedge Fund Survey, which describes the comprehensive and global effort by relevant regulators to better understand the hedge fund industry and its salient features.

The report explains the results of the second IOSCO survey and provides an overview of the hedge fund industry as of September 2012. It covers the following areas:

• Qualifying funds: The hedge survey gathered data on 1,044 qualifying funds. The United States and the United Kingdom are the two predominant regions where hedge fund managers/advisers are located.

• Assets under management: The funds captured in the survey represented US $1.94 trillion in total net assets under management.

• Fund domiciliation: These funds are usually domiciled in offshore jurisdictions in order to benefit from more favorable tax and regulatory regimes. The Cayman Islands have been the predominant domicile for these funds.

• Investment Strategy: The report indicates that the single most represented strategy among active funds is equity oriented. Macro-oriented and multi-strategy funds are also significant.

• Use of leverage and market exposure: The report shows how financial leverage is used by firms to increase their market exposure. This data is at the core of the systemic risk analysis that regulators aim to better understand and capture.

• Liquidity risk: This is a key measure by which regulators try to gauge a fund’s propensity to experience financial distress. The survey indicated that under current market conditions few funds actually need to restrict investor liquidity.

IOSCO expects to conduct its next survey with a data collection as of September 2014.

Click on the below link for more details.