The International Monetary Fund (IMF) published its Global Financial Stability Report, which included “rather unhelpful comments” on non-bank financial intermediaries (NBFIs), private credit, and hedge fund leverage, according to the Alternative Investment Management Association (AIMA).
In response to the report’s warnings around the risks hedge funds and NBFIs provide to financial stability, Daniel Austin, head of US Markets Policy and Regulation at AIMA, said in emailed commentary: “It is not correct to say that there is ‘limited transparency’ on leverage in hedge funds. There is already sufficient transparency, and it is not a lack of transparency that is causing the volatility.
“Following the post-GFC regulatory reforms securities regulators have been receiving detailed data on leverage on hedge funds along with other alternative investment funds, for a number of years now. This includes the counterparties involved, often on a fund-by-fund basis. This is the case, for example, under the US SEC’s Form PF and Annex IV of the Alternative Investment Fund Managers Directive in the UK and the EU.
“The International Organization of Securities Commissions has also been collecting and then publishing data on leverage in hedge funds for over a decade now…This IOSCO reporting has recently been enhanced at the request of the Financial Stability Board. It is a surprise that the IMF does not refer to this.”