Two private sector committees created by the President's Working Group on Financial Markets (PWG) released today their separate sets of best practices for hedge fund investors and asset managers.

We applaud the PWG committees for their work.  Hedge funds are a growing and vibrant segment of our capital markets that best serve as an investment vehicle for institutional and sophisticated investors.  They often serve as liquidity-enhancing shock absorbers for the markets by taking on legitimate risks that other market participants are unwilling to bear. 

The Treasury’s effort to provide greater transparency to the markets is welcomed by the U.S. Chamber of Commerce as a step toward:

1. Better disclosure to the investment community;
2. Enhanced risk management tools; and
3. Greater assurance that systemic risks are better understood and managed. 

This is a sign of a maturing industry which is an important component of financial market competitiveness and economic growth. The coordination of these two private sector committees represents a comprehensive approach that strikes the proper balance between protecting investors and maintaining healthy markets.

While no set of standards will resolve every aspect of this important policy debate; we continue to support all legitimate means to strengthen our capital markets, address systemic risks, prevent and eliminate fraud, and provide greater transparency to investors.

Expanding beyond hedge funds, regulators should also continue to address practices that raise significant questions, such as abusive naked short selling, regardless of which market participants use them and without jeopardizing legitimate short selling or other important investment and risk management financial market tools and instruments.