Hedge funds are pushing back against Bank of England proposals intended to limit risk taking among UK bond traders, arguing the policies would hurt liquidity and the market’s global attractiveness.
The Alternative Investment Management Association and the Managed Funds Association — the two largest industry groups representing hedge funds — do not support plans for so-called minimum haircuts on gilt repurchase agreements, according to letters to the BOE seen by Bloomberg. Such a policy would effectively cap the amount of cash investors can borrow using gilts as collateral, limiting the ability of funds to amass leverage.