Hedge funds can pose a great risk to system, says SC (841).

THE near collapse of Long Term Capital Management (LTCM), which required an equity injection of US$3.6 billion (US$1 = RM3.80), has put the whole issue of hedge funds and other highly leveraged institutions under greater scrutiny.

The issue has become more acute with the ability of such hedge funds to exert undue influence over markets and to operate under less than transparent conditions, says the Securities Commission (SC). Raising the concern that hedge funds can pose a significant risk to the stability of the financial system, the SC in an article, "Hedge Funds: Current Issues and Concerns," in its latest annual report, examines some of the issues and describes some of the regulatory measures that authorities are considering to deal with …