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The Hedge Fund Regulation Dilemma: Direct Vs. Indirect Regulation, Hossein Nabilou, Alessio M. Pacces

William & Mary Business Law Review

This Article studies regulatory strategies to address the potential systemic risk of hedge fund operation in financial markets. Due to the implications of the choice of regulatory strategies and instruments in terms of mitigating systemic risk, the Article focuses on one critical aspect of hedge fund regulation, namely the choice between direct regulation and indirect regulation. This Article defines the distinction between direct and indirect regulation, maps this distinction’s implications in terms of regulatory techniques and instruments, and analyzes the arguments for and against direct and indirect regulation of hedge funds. This Article argues that the indirect regulation of hedge …