FSA has published the report “Assessing the possible source of systemic risk from hedge funds”, based on the findings of its Hedge Fund Survey and its Hedge Fund as Counterparty Survey. The surveys found that leverage has remained largely unchanged, with significant cash leverage coming from repo agreements that need continuous rolling. Generally, funds report a good ability to manage liquidity, but most reports come from self-assessment so FSA says it is hard to gauge how these would stand up to stressed situations. FSA says the main risk arises from the danger of withdrawal of funding that could result in forced asset sales. It found counterparties have increased margining requirements and tightened up other conditions on their exposures to hedge funds since the financial crisis.(Source: FSA Hedge Fund Report)