Hedge funds see opportunities in shadow of Basel III

As Basel III is implemented, banks will be forced to meet new capital and liquidity rules. Hedge funds could profit from trades that capitalise on the banks' need to restructure their balance sheets.

For banks and hedge funds 2013 could be a tale of contrasting fortunes.

January 1, 2013 marks the official start of the implementation period for Basel III, a set of capital rules that will force banks to shed risk, raise more equity and withdraw from certain markets and activities.

While banks are tightening their belts, hedge funds, meanwhile, stand to profit from regulatory-driven trades that capitalise on banks’ need to restructure their balance sheets and are expanding their presence in areas