The regulatory climate for hedge funds

Hedge fund managers anticipate increased regulation under the new presidential administration with the majority of senior partners at US firms expecting rising compliance costs making hedge funds more costly to operate. Over 98% of senior hedge fund managers reported that the new US presidential administration is likely to increase regulation of the hedge fund industry, according to the survey. An overwhelming majority also suggested that associated compliance costs will make hedge funds more costly to operate, with over 80% of respondents in agreement. While just over 75% of participants suggest that the overall impact of the new administration will be negative, most reported that increased regulation will not lead to more fund closures or fewer start-ups. It’s a generally accepted behavioural concept that uncertainty creates negative emotions. The financial services industry in particular has always been leery of the unknown, as uncertainty magnifies risk. Consequently, we expected our findings to show a degree of scepticism regarding the new administration and its regulatory agenda. The election’s focus on the economy left many with the impression that regulatory reform will be a priority for the new regime. While the scope of these efforts is not yet defined, it is apparent that the hedge fund industry believes that regulatory action is on the horizon.

The article is on :
http://www.thehedgefundjournal.com/magazine/200812/research/a-new-regime-the-regulatory-climate-for-hedge-funds.php