US regulator calls for greater scrutiny of hedge funds after bond turmoil- FT

(Reuters) – Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC), said hedge funds and other parts of the shadow banking system need to face greater scrutiny after last month’s upheaval in U.S. government bonds, the Financial Times reported on Saturday.

Gensler told the newspaper that reducing the risks from speculative funds and non-banking financial institutions was “more important than ever”.

“We just had Treasury yields move more significantly than they had in 35 years in three days in mid-March,” the Financial Times quoted Gensler as saying, referring to the volatility in Treasury bonds last month following the rapid collapse of Silicon Valley Bank and the fall of Signature Bank.

“When you have that, it’s appropriate as a capital markets regulator to talk to folks and see whether that risk . . . propagates out.”

Last year, the SEC proposed new rules for better oversight of private equity and hedge funds that would require reporting of events indicating “significant stress” to the SEC within one business day, but the vote on that currently stands postponed.

Gensler said he had previously identified hedge funds were a risk to financial stability and that the SEC was in direct contact with market participants and received quarterly reports from hedge funds, the report added.

(This April 15. story has been corrected to say ‘last year’, not ‘last month,’ and also adds context in paragraph 5)

(Reporting by Gokul Pisharody in Bengaluru; Editing by Alex Richardson and Mark Potter)