When the Financial Services Authority published its recent discussion paper on hedge funds it said any ensuing regulation would be appropriate and proportionate. Its paper was more than 70 pages long. Aima, the alternative investment industry's trade association, published its response last week at 30 pages. This gives a perspective on what is proportionate. As to appropriate, both Aima and I have concerns about the FSA paper.

A few years ago I organised an "off the record" meeting between the FSA and members of the hedge fund industry. At the time the authority took the sanguine view that it did not regulate hedge funds and did not differentiate between hedge fund managers and other types of investment managers. That view may be about to change.