Our market regulators can probably use a break today. The SEC got pretty beaten-up on Capitol Hill, and we’ve said some meanie-pants things about the plan to merge the NASD and NYSE market regulators . And so we’re pleased to say that we’ve nothing nasty to say about NYSE market surveillance chief Robert Marchman’s comments indicating that the market regulators are planning to collect more information on hedge funds.
Thus spake Bloomberg:
“Given the proliferation of hedge funds and the impact they can have on a marketplace, we're looking at ways to build up our database on hedge funds,” said Robert Marchman in an interview. ``Our scope of review of relationships between hedge funds and other financial business-related entities will expand,'' he said, without being more specific.
The NYSE will work with the NASD, the Securities and Exchange Commission and the Chicago Board Options Exchange as pressure mounts on regulators to better police hedge funds for crimes, including insider trading, which will be the focus of a Senate Judiciary Committee meeting later today. A federal court in June struck down a rule requiring hedge funds to register with the SEC and open themselves to random inspections.
Collecting data, especially if it doesn’t involve compulsory registration or liability-inviting certification, is a good idea. The sort of thing that should be done long in advance of attempts to impose rules just because a fund collapses or lawmakers keep saying hedge funds are “unregulated.” (They’re highly regulated.)
What’s more, Marchman even marching to the right tune, looking into the relationships between hedge funds and other financial institutions. It’s here that the most mischief—insider trading, systemic dangers, anticompetitive conspiracies—can be worked.
People who spend lots of time worrying about hedge funds should probably be grateful the courts overturned the rules requiring registration. Now perhaps regulators and investigators can begin focusing on more relevant topics to investigation.
Hedge Funds to Face More Scrutiny From U.S. Market Regulators [Bloomberg]