UK hedge funds wary of signing up to code -survey

LONDON (Reuters) - Fewer than one in ten UK-managed hedge fund firms plan to sign up to the Hedge Fund Standards Board's best-practice code for the industry, according to a report from hedge fund consultants Kinetic Partners.

In a survey published on Monday of more than 100 funds managing more than half of UK-run hedge fund assets, Kinetic also found nearly one-fifth of funds said they will definitely not comply with the practice standards, while two-thirds have not yet decided.

The HFSB, which represents managers of about half the hedge fund assets in Europe, recommended standards on disclosure and governance in a bid to counter criticism that the industry is too opaque, and to stave off formal regulation.

On Thursday, some of the U.S.'s richest hedge fund managers including George Soros and Philip Falcone appeared before lawmakers and agreed that regulators should be given greater insight into how they make their money.

Kinetic said most of the funds it polled were strongly supportive of the standards, though none said they had been asked by their investors to adopt them and fewer than 5 percent had already signed up.

The code of practice was devised by the Hedge Fund Working Group, which comprised 14 leading hedge fund executives mainly based in London.

"It is essential that effective, appropriate self-regulation is applied to hedge funds," said Julian Korek, a member of Kinetic.

"The global hedge fund industry faces a time of acute stress, characterised by fund closures, increased redemptions, liquidations and litigation, and there will be pressure on governments to regulate more heavily."

Last month Antonio Borges, chairman of the HFSB, said financial regulators could be swayed into implementing potentially harmful rules in the wake of the credit crisis.

(Reporting by Laurence Fletcher; editing by John Stonestreet)