On 23 February 2010, the FSA published a paper which was entitled Assessing possible sources of systemic risk from hedge funds. The paper reported on the findings of the October 2009 hedge funds as counterparties survey (HFACS) and the hedge fund survey (HFS).

The results from the HFACS suggested that on 31 October 2009 major hedge funds did not pose a potentially destabilising credit counterparty risk across the surveyed banks. The results of the HFS show a relatively low level of leverage and suggested a contained level of risk from hedge funds at that time.

Whilst both surveys showed no clear evidence to suggest that, from the banks and hedge fund managers surveyed, any individual fund posed a significant systemic risk to the financial system at the time, this position could change and future surveys will be an important tool in identifying emerging risks.

The FSA’s intention is to repeat both surveys at six month intervals to build a time series of data that will help it monitor trends in hedge funds as they relate to systemic risk.

View Assessing possible sources of systemic risk from hedge funds, 23 February 2010