Authored by Matt Nelson, Executive Director, Strategy at Omgeo LLC, a financial operations
expert, this article looks at the consequences of pending regulations on the hedge
Much of discussion on the regulatory changes facing the financial industry in 2012
and beyond has focused on high profile topics such as systemic risk, bank capital
and OTC derivatives. Not only are these topics interesting to the masses, they’re
also where regulators and the public have pointed their fingers when handing out
blame for the crisis.
What many may not realize is that these global
regulations, including Dodd-Frank in the US and EMIR and the AIFMD in Europe, will
also have a profound and wide-reaching impact on hedge funds and the unintended
consequences on this industry may be severe.
As an example, I was recently speaking to someone who works at a sizeable hedge fund
who informed me the firm has recently decided to return their investors’ money.
Among their reasons are the daily challenges of dealing with global regulations,
demanding clients and difficult markets. I suspect that this firm is not alone and
that many firms are following or considering a similar path.
Although the US
markets are performing well, several Asian and European markets are struggling and
globally, investor confidence is shaky at best. But as hedge funds are opportunistic
and depending on their investment s......................
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