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IOSCO Technical Committee Conference, TokyoNovember 8-9, 2007
PANEL 5Approaches towards Alternative Investments – Regulation of hedge funds in the United States
John G. GainePresidentManaged Funds Association
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About MFA
• Founded in 1991.
• Only U.S.-based, global membership organization dedicated to the hedge fund industry.
• Members include hedge funds, fund of hedge funds and managed futures funds.
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Sound Practices for Hedge Fund Managers
• First document in 2000.
• 2007 edition is in its fourth iteration.
• Was prepared in response to President’s Working Group on Financial Markets (PWG).
• Several iterative improvements from prior versions.
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MFA’s Three Pillars
• Market self-discipline.
• Tailored but interoperable approaches to sound practices.
• The wholesale approach.
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Market self discipline
• Market-discipline is necessary to sound risk management.
• Ongoing dialogue among market participants is essential.
• Participants and regulators must keep talking in order to dispel market concerns and reduce risk.
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Tailored but interoperable approaches to sound practices
• One size does not fit all.
• Multiple open consultations and dialogue are key.
• Regulators and industry associations should not prescribe structure.
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The wholesale approach
• Alternative investments are risky; regulators should not forget that fact.
• MFA does not support retailization.
• Savvy investors vs. retail investors.