The Hedge Fund Working Group (HFWG), consisting of 14 of London's largest hedge fund managers and headed by Sir Andrew Large, former deputy governor of the Bank of England, yesterday published a consultation document proposing new best practice guidelines for the hedge fund industry.

The guidelines, aimed at hedge fund managers, are designed to increase transparency and standards of governance in the industry. The report sets out three main standards: the disclosure of holdings of complex, hard-to-value securities, and the methods used to value them; clear risk management plans, including those to address liquidity risk; and clear policies on dealing with conflicts between investors and fund managers.

The report has been sent to leading figures in the hedge fund industry and the City for consultation until mid-December, with the working group expected to publish its final guidelines in January 2008.

Herbert Smith provided advice to HFWG on a number of legal and regulatory issues concerning the report's best practice standards and other related issues. The consultation document is available on the HFWG website at