A loophole in regulations that allows some offshore-based hedge funds to bypass sending trades through a clearinghouse must be addressed, according to Commodity Futures Trading Commission Chairman Gary Gensler. "If we don't address this, the P.O. boxes may be offshore in places like the Cayman Islands, but the risk will flow back here," he said. Hedge funds that are registered offshore are not subject to the clearing requirement even if all of their business is done in the U.S.

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