On June 11, the UK Financial Services Authority (FSA) published its feedback to Discussion Paper DP06/6 “Private Equity: A discussion of risk and regulatory engagement”, which examined the impact of growth and development in the private equity market on the FSA's regulation of the UK's wholesale markets.
In DP06/6 the FSA identified the risks it perceived were posed to its statutory objectives by the growth in private equity and outlined the measures taken to mitigate these risks. The feedback received confirmed that FSA had correctly identified and prioritized those risks and that the proposed regulatory approach to dealing with them was appropriate and effective. According to the FSA, conflicts of interest still pose a significant risk in the private equity markets. The FSA intends to tighten the regulatory reporting requirements for firms and will conduct a semi-annual survey every six months on banks' exposures to leveraged buy-outs in which private equity funds hada stake.
The International Organization of Securities Commissions (IOSCO) has also commissioned a taskforce, to be chaired by the FSA, to assess the impact of recent developments in the private equity market and identify issues which can be addressed within its remit.