SAR seeks greater hedge-fund disclosure, information sharing

Hong Kong is to call for higher standards of disclosure for hedge funds, and greater co-ordination and co-operation among banking and securities regulators to ensure more information is known about their activities.

Securities and Futures Commission deputy chairman Laura Cha Shih May-lung is arriving in London next week for a special meeting of the International Organisation of Securities Commissions to launch a hedge fund task force aimed at preventing highly leveraged financial instruments from exerting excessive power over markets.

Speaking in Davos, where she is attending the annual World Economic Forum, Ms Cha said there must be a greater degree of information sharing between regulators - both cross-sector and cross-border.

'Banking regulators may know more than securities regulators about what some investment funds are doing,' she said.

Hong Kong has suffered severe market turbulence because of hedge funds, particularly last August when investors triggered a double-play on the market - which involved shorting both the stock market and the Hong Kong dollar - forcing up short-term interest rates to astronomical levels.

However, Ms Cha said she did not believe that hedge funds themselves should be regulated as such action may prove counter-productive, sending them offshore, and yet rendering them no less able to put pressure on markets.

'We do not want to stifle the market . . . if you say that every thing is to be regulated . . . then there is also a resource problem and a technical problem,' she said.