Hedge funds do not pose systemic risk, concludes FSA

By Louise Armitstead, Chief City Correspondent Published: 10:03PM GMT twenty-three February 2010

The report, carried out by the Financial Services Authority (FSA), will throw serve disbelief on the need for the difficult law due by the European Commission"s Alternative Investment Fund Managers (AIFM) directive.

The FSA pronounced it had surveyed 50 of the largest sidestep account managers that managed "over �300bn resources underneath government representing 20pc of the tellurian industry", as well as all the tip budding broking groups inside of the investment banks.

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The regulator, that took a snap-shot of the sector"s risks, precedence levels and counterparties on Oct 31st 2009 , found:

Banks did not have a strong bearing and so sidestep supports "did not poise a potentially destabilising credit counterparty risk opposite the surveyed banks."Rather than the high levels of borrowing, "a comparatively low turn of "leverage"" and "a contained turn of risk."No common bearing of banks to any sold sidestep account and so "no transparent justification to indicate that... any particular account acted a poignant systemic risk to the monetary system."

The FSA pronounced it had picked up "a really large volume of data" and was confident with the findings. The regulator combined that it recognized the incident could shift rapidly. It pronounced the consult would be updated each 6 months.

The consult is expected to be used to direct a dilution of the AIFM gauge that has caused a charge of controversy, quite in London where over 80pc of the alternatives industry is based.