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By Benedicte Gravrand, Opalesque London:

The Swiss Funds Association (SFA) sent a letter last week to IOSCO`s task force on "Unregulated Financial Entities" and made some specific observations with regards to the regulation of hedge funds (SFA’s letter to IOSCO). SFA’s main points were:

• The prevailing perception of hedge funds is that they are unregulated, whereas the majority of hedge fund managers are in fact regulated or partly regulated;
• Most financial entities either investing in or providing leverage to hedge funds are also regulated - thus they provide a second layer of regulations to the hedge fund world;
• Hedge funds did not cause the current crises, so one should not focus on them as a consequence of the crises;
• In addition to the direct and indirect state regulations are self-regulatory standards, which should be not be ignored and let to waste;
• A general definition of hedge funds is highly unrepresentative – therefore misleading. Also the issues of short-selling and leverage should be considered separately;
• Regulatory assessments should target unregulated hedge fund managers or those that “are not subject to prudential supervision;”
• SFA’s last point was that “in Switzerland, well-diversified fund of hedge funds [FoHFs] are open to the public subject to minimum investments determined by the sponsor. In spite of the liquidity pro......................

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