To regulate or not to regulate hedge funds has been a question that many international regulators have faced. The question now is to what extent regulation will be imposed, not when it will be imposed. More recently, the estimated US$1,6000bn (£800bn, €1,200bn)2 industry has faced much scrutiny concerning the rewards given to their senior managers, not to mention the added voices of financial regulators concerning the lack of regulation and the risk that hedge funds pose to the stability of the financial markets.3 Irrespective of their popularity and high returns regulators will struggle dealing with hedge funds, because clamping down on them is politically difficult as the industry is large and competitive. Notwithstanding this, because the industry is growing so quickly and without full transparency, regulators in the future will have to be more vigilant on their stance and cautious in the policy direction they take in attempting to regulate them.
