Higher collateral demands have reduced hedge fund systemic risk, say Risk Europe panellists

Panellists at Risk Europe, held in early April in Brussels, claim banks are demanding much higher levels of collateral from hedge funds today, reducing a source of systemic risk

Hedge funds do not pose the same level of systemic risk as they did pre-financial crisis, because of the higher levels of collateral demanded by banks, said panellists at the Risk Europe conference in Brussels on April 6.

Banks were very quick to change collateral terms with hedge funds after the crisis, said Vasilios Siokis, chief risk officer at Cheyne Capital Management. He said the procedures around margin terms for hedge funds with banks have completely changed post crisis - the banks are