European Financial and Accounting Journal 2012, 7(2):7-23 | DOI: 10.18267/j.efaj.7

Hedge Funds and their (Non)regulation

Petr Musílek
Prof. Ing. Petr Musílek, Ph.D. - Vice Dean for Science, Professor; Faculty of Finance and Accounting, University of Economics Prague, W. Churchill sq. 4, 130 67 Prague, Czech Republic;< musilek@vse.cz>.

The objective of this contribution is not only to explain the position of institutional investors on global capital markets, but also evaluate their impact on the operation of financial systems. The core of this contribution is dedicated to hedge funds that in the period before the outbreak of global financial crisis were not subjected to almost any regulation, except for some dishonest practices. Institutional response to the global financial crisis however changed significantly the regulatory-supervisory approach also to hedge funds. The Dodd-Frank Act introduced quite promptly sensitive registration of important investment managers of hedge funds in the USA. At the same time, the new American financial legislation passed the duty for managers of hedge funds and other private funds to keep prescribed records. On the other hand, the European directive on managers of alternative investment funds has a very restrictive nature, because it implements a standard license system, costly internal and external control mechanisms, and increases inadequately powers of supervisory authorities.

Keywords: Alternative investment funds managers, Global financial crisis, Hedge funds, Institutional investors, Regulation and supervision
JEL classification: G23

Published: June 1, 2012  Show citation

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Musílek, P. (2012). Hedge Funds and their (Non)regulation. European Financial and Accounting Journal, 7(2), 7-23. doi: 10.18267/j.efaj.7
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