A final report on a voluntary best practices code for U.K. hedge fund managers, issued today, focuses on the valuation of assets, risk management and corporate governance.
Among the recommendations by the Hedge Fund Working Group: Money managers should seek independent, third-party organizations to value their assets. If thats not possible, the internal valuation process should be done by someone other than the portfolio manager.
The group also encourages disclosure of a firms risk management framework to investors and implementation of clear corporate governance guidelines addressing conflict-of-interest issues, according to the report. While the recommendations are voluntary, managers who dont follow them are asked to explain their choice to investors.
In addition, a new Hedge Fund Standards Board was launched to oversee compliance and update the best practices code as needed. One upcoming task of the new board will be to find ways to converge the U.K. standards with that of the Presidents Working Group on Financial Markets in the U.S. The U.S. group is expected to release a parallel set of recommendations later this year.