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CFA Institute Centre Calls for Single Global Hedge Fund Standard with a Greater Focus on Investor Protection and Ethical and Professional Conduct

London, UK, December 13, 2007 − In its response to the Hedge Fund Working Group (HFWG) consultation paper today, the CFA Institute Centre for Financial Market Integrity expressed that it would like to see included in the construction of the HFWG standards support for a consistent set of global standards for the hedge funds industry and greater emphasis to address more fully the important areas of investor protection and the provision of ethical and professional conduct.

The CFA Institute Centre welcomes the efforts of the HFWG in seeking to develop a self-regulatory template for the hedge fund industry. It believes that this distinguished group is in a position to provide global leadership in creating a code process, but it must include adequate consideration for investor protection and professional conduct if it is to address the concerns of those from outside of the hedge funds sector.

An example of such higher professional standards was developed by the CFA Institute Centre and published as the Asset Manager Code of Professional Conduct. This is a firm-wide code that evolved from the CFA Institute Code of Ethics and Standards of Professional Conduct, which is annually re-affirmed by its members. CFA Institute holds this document out to the HFWG as a set of global principles of professional conduct that could augment the ethical direction of the consultation.

Commenting on the response, Charles Cronin, CFA, EMEA head of the CFA Institute Centre, said, “We need a consistent set of global standards for hedge fund practices. We would encourage the HFWG to join others in working toward a single ‘global’ standard reflecting consistent adherence to a full set of professional and ethical principles. This would include reconsideration of whether the ‘comply or explain’ approach would contradict the goal of having a consistent and comparable standard. One important example of how to effectively address that issue are the Global Investment Performance Standards (GIPS®), which are now recognised as the industry standard in 28 countries including the UK, precisely because they are rigorous, require full adoption, and provide a consistent benchmark of comparison. GIPS have become globally endorsed by the investment management industry and its stakeholders. There is no reason why the hedge fund industry should not aim for a similar solution.”

Alan Brown, chairman of the CFA Institute Centre Advisory Council and group chief investment officer of Schroder Investment Management Limited, said: “The industry now has several competing sets of standards from AIMA, MFA, UAE, HFWG, CFA Institute and soon a set of proposals from the U.S. Treasury to navigate. We don’t need six rule books. Creating a single global standard for hedge funds to address the key issues of stakeholders would be a pragmatic step forward for all.”

CFA Institute Centre for Financial Market Integrity
The CFA Institute Centre develops timely, practical solutions to global capital market issues, while advancing investors’ interests by promoting the highest standards of ethics and professionalism within the investment community worldwide. Established in 2004, CFA Institute Centre builds upon the CFA Institute 40-year history of standards and advocacy work, especially its Code of Ethics and Standards of Professional Conduct for the investment profession, which were first established in the 1960s.  

CFA Institute
CFA Institute is the global membership association that administers the Chartered Financial Analyst® (CFA®) and Certificate in Investment Performance Measurement (CIPM) curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 92,000 members, who include the world’s 79,000 CFA charterholders, in 131 countries and territories, as well as 135 affiliated professional societies in 56 countries and territories. In 2007, CFA Institute celebrates the 60th anniversary of “the founding of a profession.” CFA Institute has offices in Charlottesville, Va., London, Hong Kong, and New York. More information may be found at www.cfainstitute.org. (Bloomberg users can find CFA Institute at 497458Z).