The secretive hedge fund industry has made a big step towards increasing transparency and improving risk controls with UK plans for the first voluntary industry code of conduct.

A group of 14 of London’s biggest hedge funds has drawn up a broad agenda for change in a bid to fend off pressure from Germany for a clampdown by the Group of Eight leading industrial nations and financial watchdogs. This pressure has intensified in wake of the credit squeeze and subsequent calls for more transparency in financial markets.