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Hedge funds tackled by City watchdog

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10th Nov 2005
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The Financial Services Authority (FSA) is collaborating with the Federal Reserve Bank of New York to tackle delays in trade confirmations and the lax disclosure of contract transfers particularly in the credit risk derivatives market.

Giving evidence to the Commons Treasury Select Committee, FSA chairman Sir Callum McCarthy said: 'We have been working very closely with the Federal Reserve Bank of New York so that there is a pincer movement. There is no doubt at all that not only would we take further action but that the New York Fed would too.'

He said around 200 of the world's largest hedge fund managers are based in London and the FSA is investigating at least one about issues of market conduct, although he declined to give further details to the committee.

Sir Callum and his chief executive, John Tiner, were questioned for more than two hours by MPs, who also questioned them about the regulation of the proposed self-invested personal pension plans (Sipps).

Sipps will be unregulated for their first year but Sir Callum said the FSA will be monitoring them 'very closely', although he thought it would be 'deeply unattractive' to regulate investment in a whole range of goods and products, which could include property, works of art and even racehorses.

But he added that a number of providers were already regulated by the FSA and they would be reminded of the responsibilities to ensure that investors understood the various risks involved.

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