Hedge funds using more leverage, says Greenwich

Nine of them said their prime brokers are extending more credit now than they were six months ago, and 20% said their prime brokers have decreased haircut requirements in the same period, said Greenwich.

This could play an important role in a widely expected regulatory review, with a planned US Securities and Exchange Commission move to require hedge funds to be registered.

"None of these developments would, on its own, be a cause for immediate concern," said Greenwich consultant Peter D’Amario. "But in aggregate these trends bear serious consideration by hedge fund investors, not only as possible indicators of an ‘overheated’ market, but also as potential harbingers of intervention by regulators in the US and Europe."

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