FSOC Creates Working Group To Examine Hedge Fund Leverage

In a public meeting, the Financial Stability Oversight Council (FSOC) updated its two-year review of potential risks to the U.S. financial system from hedge funds, mutual funds and other funds' liquidity, leverage and redemptions. It declined to designate any asset managers as "systematically important," however the regulatory body did raise concerns about a concentration of leverage in large hedge funds and created a working group to study data on firms in a report on asset management. The group will be composed of member agency staff and will report by year-end on issues such as counterparty exposure, margin investing, trading strategies and possible standards for measuring leverage.