1. PANEL 5 John G. Gaine President Managed Funds Association
IOSCO Technical Committee Conference, Tokyo
November 8-9, 2007
PANEL 5
Approaches towards Alternative Investments – Regulation of hedge funds in the United States
John G. Gaine
President
Managed Funds Association
Re-examining Industry Disciplines in Today’s Volatile Markets:
Principles in Risk Management and Valuation

2. About MFA
Founded in 1991.
Only U.S.-based, global membership organization dedicated to the hedge fund industry.
Members include hedge funds, fund of hedge funds and managed futures funds.
John G. Gaine
MFA President

3. Sound Practices for Hedge Fund Managers
First document in 2000.
2007 edition is in its fourth iteration.
Was prepared in response to President’s Working Group on Financial Markets (PWG).
Several iterative improvements from prior versions.
John G. Gaine
MFA President

4. MFA’s Three Pillars Market self-discipline.
Tailored but interoperable approaches to sound practices.
The wholesale approach.
John G. Gaine
MFA President

5. Market self discipline
Market-discipline is necessary to sound risk management.
Ongoing dialogue among market participants is essential.
Participants and regulators must keep talking in order to dispel market concerns and reduce risk.
John G. Gaine
MFA President

6. Tailored but interoperable approaches to sound practices
One size does not fit all.
Multiple open consultations and dialogue are key.
Regulators and industry associations should not prescribe structure.
Moderator:
Timothy Wilson, Chief Risk Officer, Caxton Associates, L.L.C.
Panelists:
Kathryn E. Dick, Deputy Comptroller of Credit and Market Risk, OCC
Michael Hsu, Financial Economist, SEC
Brian Peters, Senior Vice President, Risk Management, Federal Reserve Bank of NY

7. The wholesale approach
Alternative investments are risky; regulators should not forget that fact.
MFA does not support retailization.
Savvy investors vs. retail investors.
John G. Gaine
MFA President