On February 28, the UK Financial Services Authority (FSA) produced its latest biannual report, "Assessing Possible Sources of Systemic Risk from Hedge Funds." This report sets out the FSA's key findings from two hedge fund surveys conducted in September and October 2010—its hedge funds as counterparties survey (HFACS) and its Hedge Funds Survey (HFS). The FSA conducts these surveys every six months to assist it in understanding potential sources of systemic risk in the hedge fund sector. (See the February 26, 2010, and August 13, 2010, editions of Corporate and Financial Weekly Digest for reports on previous HFS and HFACS.)

The February 2011 report's findings include the following...