Securities regulators are expected to begin collecting data from hedge funds in an effort to assist them in assessing possible systemic risks arising from the hedge fund sector. The template1 for the global collection of hedge fundrelated information was published by the technical committee of the International Organization of Securities Commissions ("IOSCO") in February 2010.2 The technical committee recommended that data gathering begin in September 2010.
Commissioners of the Securities and Exchange Commission (the "SEC"), in recent speeches and in testimony before Congress, have expressed their view that cooperation among securities regulators is vital to effective oversight of cross-border entities and to prevent international securities fraud. They have commented that information sharing among securities regulators and having access to the right type of information for risk monitoring purposes is critical.
IOSCO is the leading international policy forum for securities regulators. The securities regulators that are members of IOSCO regulate more than 95% of the world's securities markets in over 100 jurisdictions. The IOSCO members aim to: (i) protect investors; (ii) ensure that markets are fair, efficient and transparent; and (iii) reduce systemic risk.
The template sets forth 11 categories of information that securities regulators expect to collect which incorporates both supervisory and systemic data. The template is not meant to be a comprehensive list of all types of information and data that regulators might seek and regulators are not restricted from requiring additional information at the domestic level. The categories of information include:
To see table please click here.
IOSCO does not have the ability to promulgate regulations and depends on its member securities regulators to adopt regulations in accordance with the governing law of their home jurisdiction. The ability of a securities regulator in a particular country to adopt rules and the reach of the disclosure required under those rules will be subject to many factors, including the political climate in that jurisdiction.
The Private Fund Investment Advisers Registration Act of 2010 requires the SEC to issue rules which require investment advisers to private funds to file such reports as the SEC deems necessary for the protection of investors and for the assessment of systemic risks. Having played an active role as a lead member of IOSCO, it is likely that the rules that the SEC adopts will require such reports to contain much of the information proposed by IOSCO to be included in the template.