NorthJersey.com – U.S. and U.K. regulators will meet with Wall Street securities firms to discuss whether too many loans to hedge funds leaves them overexposed to potential meltdowns.
The Securities and Exchange Commission, the Federal Reserve and the U.K.’s Financial Services Authority will meet with firms in “just a few weeks” to discuss margin requirements and how banks can limit their credit risk to hedge funds, U.S. Securities and Exchange Commissioner Annette Nazareth said Wednesday.
“Several of these firms are major players in prime brokerage, lending securities and capital to funds to allow execution of strategies,” Nazareth told a meeting of the American Institute of Certified Public Accountants in New York.
Regulators have become increasingly concerned that lending to hedge funds could put banks at risk after Amaranth Advisors LLC, a Greenwich, Conn.-based fund, lost $6.5 billion in September on badnatural gas trades. Oversight has decreased since a federal court in June threw out SEC rules forcing funds to submit to random inspections
