Hedge funds are significant players in the U.S. capital markets, but differ from other market participants in important ways such as their use of a wide range of complex trading strategies and instruments, leverage, opacity to outsiders, and their compensation structure. The traditional bulwark...

[...]This article examines how the nature and characteristics ofhedge funds may generate “market failures” that make CCRMfor exposures to hedge funds intrinsically more difficult tomanage, both for the individual firm and for policymakersconcerned with systemic risk. We put forward no...