Broker snap: Increased regulation may cramp Man's style

31st Jul 2009 11:04

The prospect of the US Commodity Futures Trading Commission (CFTC) tightening up rules on position limits and hedging exemptions is bad news for hedge fund manager Man Group, UBS reckons.Man's flagship AHL fund is heavily invested in commodities, and any attempt to reduce volatility in the commodities market could cramp its style, UBS argues. 'This is negative for Man as its key fund, AHL, has 30% of its portfolio in commodities,' UBS said in a research note in which it downgraded the stock from "neutral" to "sell". UBS has left its price target of 245p unchanged. Gary Gensler, CFTC chairman, has said that the US should "seriously consider" strict position limits on energy markets in order to deter speculators. "This hearing is an opportunity to determine how speculative position limits could be used to address excessive speculation, not how we can eliminate speculation," Gensler said at a CFTC meeting earlier this week.