The regulation of hedge funds: ensuring financial stability through AIFMD’s mandatory disclosure regime
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Date
2026-01-10
Authors
Bullman, Thomas
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Publisher
University College Cork
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Abstract
Hedge funds currently occupy a significant position within financial markets. Over the past 20 years, hedge funds have grown as a staple investment for pension funds, institutional and high net worth investors, and sovereign wealth funds. As an unrestricted form of asset management, hedge funds are able to earn above-average returns. Unrestrained investment practices, combined with widespread industry opacity, have become a concern for policymakers and regulators seeking to strengthen the financial system against systemic risk. Within the European Union, such concern was addressed through the implementation of the Alternative Investment Fund Managers Directive (AIFMD). The central question of this research is whether or not AIFMD, in the pursuit of financial stability, actually achieves in practice what is provided for in the provisions of the legislation. This requires an analysis of how policy has translated into regulatory change, how such regulatory change is complied with, and ultimately how market practices are supervised. The conclusion of this research is that the element of real-time intervention is missing from the current regulatory mechanisms for identifying and combatting systemic risk. Hence, the outcome of this analysis is to make a two-fold proposal to ensure that the AIFMD mandatory disclosure regime (also known as a mandatory reporting regime) can actually deliver financial stability within the financial markets that hedge funds operate in: firstly, a proposed move to real-time mandatory disclosure for regulatees, and, secondly, a proposal for an upgraded supervisory circuit breaker framework that can be implemented into the national law of EU Member States, based on enhanced information-sharing coordinated by the European Securities Markets Authority (ESMA).
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Keywords
Hedge funds , Systemic risk , Financial stability , Mandatory disclosure , AIFMD , Real time , Regulatory reporting
Citation
Bullman, T. 2026. The regulation of hedge funds: ensuring financial stability through AIFMD’s mandatory disclosure regime. PhD Thesis, University College Cork.