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The proposed changes, which are subject to consultation with the industry, would involve introducing new standards requiring fund governing bodies to appoint an independent third party to administer the fund, prepare accounting records and carry out NAV calculations as well as having an independent custodian.

The proposed changes regarding redemptions would place more onerous disclosure requirements on managers regarding possible restrictions on withdrawals.

Antonio Borges, Chairman of the HFSB, said:

“The HFSB standards would already make it very difficult for a Madoff-type scandal to occur but we believe it is right to raise the bar higher in the light of recent events.

“These new standards would help to safeguard investors’ assets and also lead to improvements in the redemption regime for hedge funds.”

Separately NewSmith Asset Management LLP, IKOS, Reech AIM, Partners and Rose & Sky Investments are among 12 new managers who become signatories to the standards, bringing the total to 56 hedge fund managers.

The full list of new signatories is Auriel Capital Management LLP, Finisterre Capital LLP, Gramercy, IKOS, Nau Capital, NewSmith Asset Management LLP, Northwest Investment Management, Powe Capital Management LLP, Prana Capital LLP, Reech AIM Partners LLP, Rose & Sky Investments (Cayman) Ltd, and VCM Fund Management LLP.

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The HFSB was formed in January 2008 to take forward the work started by the Hedge Fund Working Group (HFWG), whose report on best practice standards was published that month. A total of 56 hedge fund managers have now committed themselves to the HFSB’s best practice standards.

The HFWG report on best practice standards for hedge fund managers is available at www.hfsb.org.