Fears for super as hedge funds play

THE Federal Government is worried hedge funds' activity in the current market conditions could damage national superannuation savings.

Empty pocket /File

Fears for super as hedge funds play

THE Federal Government is concerned that increased hedge fund activity in the current market conditions could damage national superannuation savings.

Superannuation Minister Nick Sherry said  that while the Government could not regulate against hedge funds or investment strategies, it could consider greater reporting requirements for the funds.

He said that although the Government agreed hedge funds played a role in the natural mechanisms of the market, greater volatility had resulted.

"On the other hand, the investment strategies of hedge funds have associated risks, which can influence the performance of prudentially regulated institutions, such as banks and superannuation funds,'' he said.

"For this reason, hedge funds need to provide a high level of transparency to their investors, particularly those that are prudentially regulated and of systemic importance, so that exposures to market risks can be accurately assessed and managed by those investors.''

The Government has taken a tough approach to financial market regulation so far this year, after Prime Minister Kevin Rudd announced an official review of the current disclosure requirements for equity derivative products.

The Government is now looking at the legislation covering stock borrowing.