Third, 20 of the thresholds result from EU regulations and/or Basel definitions. The other 33 are things we have done ourselves here in the UK. Fourth, if we crudely translate non-asset thresholds into an asset equivalent in order to be able to map all thresholds on one scale, then most are concentrated in the area below a size corresponding to £ in assets or deposits. 3 This bears out the prediction made last year by former PRA Executive Director James Proudman that the PRA would soon develop a form of ‘cyborg supervision’ involving humans and machines working closely together. 4 To identify thresholds, the robot ran a series of textual searches on the dataset. The search combined quantitative values £ € expressions related to thresholds (eg. less/more than, greater/smaller than, up to); and typical metrics used for thresholds (eg. assets, balance sheet, deposits, accounts). It also included thresholds, such those on executive pay and exposures, that are only indirectly linked with size. The results were then cross-checked and cleaned by subject matter specialists. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  One could make various observations about these findings. But one obvious question to ask is whether or not this is too complicated a picture. While it is a good thing for small firms that we exempt them from various bits of regulation, is there a case for making the gradient a bit easier to discern and climb as they grow? Should we rationalise and harmonise any of these thresholds?

Other positive spinoffs include fund of hedge funds managers and consultants, who can add value to investors in the areas of hedge fund selection and allocation among different fund strategies. 4  Merrill Lynch/Cap Gemini Ernst & Young World Wealth Report, 2002. 5  An estimated 1.7 million high net worth individuals (defined as individuals with more than $ million in financial asset wealth) in Asia hold in aggregate $ trillion of financial assets. (Merrill Lynch/Cap Gemini Ernst & Young World Wealth Report, 2002). 2  BIS Review 52/2002  Second, hedge funds can lead to more wide-spread use of innovative financial instruments and the development of cutting-edge technical and investment skills. Unit trusts typically go long-only on listed equities, bonds and cash. In comparison, hedge funds, with their broad investment mandates, can employ a selection of designer instruments and creative investment strategies and face little (if any) restrictions on what they can hold. Third, hedge funds can add to the liquidity and efficiency of our capital markets. The contrarian instincts of hedge fund managers provide liquidity and help curtail unsustainable asset bubbles. By seeking out arbitrage opportunities, hedge funds also improve the information flow and, consequently, the efficiency of the market. Further, specialist hedge funds that invest in unlisted stocks and unrated bonds facilitate fundraising by small, relatively unknown companies. Singapore’s regulatory approach Singapore’s approach to regulating hedge funds is risk-focused and differentiated, balancing the potential benefits with the risks that hedge funds could pose to the financial system.