POTSDAM, Germany (Thomson Financial) - German Finance Minister Peer Steinbrueck said his disagreement with the US and UK on ways of reducing risks related to the activities of hedge funds only concerns the way in which agreement is reached with the hedge fund industry, and not on the need for a code of conduct itself.
'This term 'code of conduct' is not the term that we had a disagreement about. The aspect we couldn't agree upon with our British and American friends is the approach,' Steinbrueck told a news conference at the end of this weekend's G8 finance ministers meeting.
This discussion concerns the question of whether a code of conduct should be driven by governments and monitored by supervisory authorities or whether it should be left up to the hedge fund industry to work out its own code in dialogue with the authorities, he said.
Steinbrueck said the Financial Stability Forum's report on hedge funds, which was adopted by the G8 meeting, represents an intermediate step in the process of getting more transparency in hedge fund operations.
The FSF, chaired by Bank of Italy governor Mario Draghi, urged financial authorities, banks, investors and hedge fund managers to take further action to counter risks to financial stability from the activities of hedge funds and other highly leveraged institutions.
'We will negotiate with the representatives of the hedge funds, with the creditors and with the counterparties and they now have to implement these recommendations. If this leads to a situation where Mario Draghi considers it possible that the industry itself works on guidelines and benchmarks to achieve a higher level of market integrity and market discipline, then we achieve the (result) there,' said Steinbrueck.
'I don't want to discuss the mere terminology. Terminology doesn't matter if results at the end of the day are the results we want to have,' he said.
He said there is a growing interest in the hedge fund industry itself for guidelines or benchmarks that could be put in place to achieve better transparency for its business partners, better protection for investors and a reduction in potential systemic risks.
But Steinbrueck said there had never been any question of reaching agreement on a code of conduct for the industry at next month's G8 summit in Heiligendamm.
He said his move to put the subject on the agenda of the G7, G8 and Ecofin had been widely welcomed, but that the process will continue under Japan's presidency of the G8 next year. steve.whitehouse@thomson.com sw/vlb COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.