EU commissioner Charlie McCreevy yesterday backed a decision by top US regulators not to press for further formal hedge fund oversight, capping a week in which authorities signalled that they were happy with a regulatory "light touch" for the industry.

The developments mark a contrast to six months ago, when further regulation of hedge funds looked like it could be on the agenda as US lawmakers fretted about the systemic risks posed by a hedge fund collapse.

They also show how efforts by the nascent hedge fund lobby to educate lawmakers and financial policymakers have borne fruit.

Mr McCreevy, the EU's internal market commissioner, welcomed a decision by the President's Working Group on Financial Markets - which includes the Federal Reserve, Treasury and Securities and Exchange Commission - to step back from further regulation and instead issue guidelines that are designed to encourage hedge funds, investors and creditors more effectively to monitor risk.

He said: "I share the view that the current regulatory structure is working well. We have a well-developed set of checks and balances in place to address the possible impacts of hedge fund/private equity businesses on the overall financial system."

The hedge fund industry was quick to welcome the PWG's decision. - (Financial Times service)