FSA and SEC hit hedge funds

The bosses of the UK Financial Services Authority (FSA), Hector Sants, and the US Securities and Exchange Commission (SEC) Mary Schapiro, will work together to regulate key market participants.

They agreed to identify a common, coherent set of data to collect from hedge fund advisers/managers to help identify risks to their regulatory objectives and mandates.

Other target areas include over-the-counter derivatives markets and central clearing; accounting issues; regulatory reform; credit rating agency oversight; short selling; and corporate governance and compensation practices.

Strategic dialogue

The announcement came out of the fourth meeting of the SEC-FSA Strategic Dialogue, begin in June 2006, through which the regulators’ bosses meet to discuss areas of mutual interest.

FSA chief executive, Hector Sants said: "The global crisis has underlined how intertwined financial markets and institutions are and regulators around the world have to work together to ensure appropriate oversight. We are all working alongside the Financial Stability Board and other international regulatory committees to drive forward global financial reforms. The strategic dialogue with the SEC is a valuable component of the discussions around these reforms, particularly in areas of joint interest and in identifying potential regulatory gaps."

SEC chairman, Mary Schapiro, said: "As the regulators of two of the world's major market centres, the SEC and the FSA have a strong interest in collaborating with respect to OTC markets and hedge funds, credit rating agencies and other market participants with cross-border operations. Only through strong cooperation can we achieve coherent oversight of global actors and limit opportunities for playing the regulatory seams. I look forward to continuing this successful dialogue between the SEC and FSA."