Analysis: Hedge funds register, wait for SEC to visit

Hedge fund managers are increasingly nervous about getting a knock on the door from U.S. securities regulators now that a new rule requires them to register as investment advisers and provide lots of data about their inner workings as a result.

Hundreds of large managers, which already employ sizable legal teams, took the mechanics of meeting the March 30 deadline in stride, industry consultants say.

The cost of paying lawyers and adding compliance workers to ready for the new requirement, which was part of the Dodd-Frank financial reform act, generally proved most burdensome for funds with less than $500 million in assets. And all types of funds --large and small -- had to commit hundreds of hours going through the process of checking boxes and writing narratives.

Now a far bigger concern for the industry is what the U.S. Securities and Exchange Commission will do with some of the information they are required to provide. Some fear a possible "witch hunt" from regulators eager to make an example of a fund that has been sloppy in enforcing the new rules, industry analysts say.

"What worries big hedge fund managers the most right now are the chances of having an SEC examiner show up at their doors," said Gary Watkins, a founding partner at consulting firm ACA Compliance Group. "And the chances are that there will be visits sooner rather than later."

The new rule, among other things, requires funds to provide information about any affiliates, potential conflicts of interest and details about their investors.

The push to require hedge fund managers with $100 million or more in assets under management to register with the SEC has been a long time coming. An earlier registration rule was struck down by the courts in 2005. But the idea made a comeback in the aftermath of the financial crisis and the collapse of giant Ponzi schemes like the one orchestrated by Bernard Madoff.

Now, for the first time, powerful hedge fund managers like Tiger Global Management's Chase Coleman, Tudor Investment Corporations' Paul Tudor Jones and Moore Capital Management's Louis Bacon will have to share information with the SEC and some of that with the general public as well. The fund firms did not immediately respond to requests for comment on the matter.

Thanks to the registration process, anyone with access to a computer can now look up some of the basic information hedge funds must now provide to regulators on the SEC's Investment Adviser Public Disclosure website.

"Registration does not mean hedge funds can now sit back and relax, as they are effectively on the line now," said Jonathan Saxton, who advises hedge funds on compliance at Kinetic Partners. "Now, the SEC could pay a visit, and firms are definitely nervous about that."

To be sure, for some big and well-known hedge fund managers the arrival of the registration deadline is no big deal. Managers like John Paulson of Paulson & Co, David Einhorn of Greenlight Capital and Bill Ackman of Pershing Square Capital Management have been registered with the SEC for quite a while.

John Nester, an SEC spokesman, says concerns about regulators using registration to embark on a campaign against hedge funds is overblown.

"I'm not aware of anything that would provide a basis for such a view," he said.

So far this year, the SEC has received registration information from about 1,300 hedge fund advisers. To handle the new volume of work, the regulatory agency has hired 10 additional examiners to review investment advisers and companies in fiscal 2012 and has the ability to hire more in fiscal 2013.

Examiners are likely to look most closely at which prime brokers, accountants, and auditors hedge funds use; how much money they have under management and whether that number fluctuates dramatically; and what types of investment strategies managers are pursuing, lawyers and consultants said.

"The exams that will be done now are all risk-based," said Marc Elovitz who works with hedge funds as a partner at law firm Schulte Roth & Zabel. "Previously when the SEC came to review a fund, they knew nothing about you and it was very much a fact finding investigation. Now they are doing a lot more to get information on the front end."

In addition to the data the funds have to submit this week, many will be required to submit a so-called Form PF starting in a few months. That data is meant to be used by the Financial Stability Oversight Council only and is meant to remain confidential. However, some people worry it might fall into the wrong hands.

"There is also significant concern about the protection of the proprietary information collected through this process, though the SEC has made clear it is taking all the necessary steps to keep our members' data secure," said Richard Baker, President of the industry lobby group Managed Funds Association.

Despite many of the worries, a number of newcomers to the industry took the process in stride as part of an evolving industry where investors like pension funds simply demand more transparency.

Mick McGuire got busy registering his San Francisco-based Marcato Capital Management more than a year before the impending SEC rules prompted everyone else to get busy too.

McGuire had plenty of experience with registration having previously worked at Ackman's Pershing Square Capital Management, which also registered as a young fund long before it became a darling in the pension fund world and grew to manage roughly $10 billion.

"As a newer fund we had the advantage of being able to establish these procedures at the very beginning and to capture all the information we need to meet the requirements," said McGuire. "But for a multi-strategy fund that has been around for years and has eight offices around the world, I can see how the process might have been more cumbersome," he added.

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Hedge fund COMAC stays bearish despite rally

Hedge fund COMAC Capital, the $5.2 billion (3.3 billion pound) macro fund run by Colm O'Shea, is bracing for a fresh round of turmoil in European markets, people familiar with the fund said, and is sticking to its bearish strategy despite losing out in this year's rally.

London-based COMAC, down more than 5 percent in the period up to mid-March this year, believes the flood of cheap central bank cash into parched markets is only a temporary fix for Europe's ills, and masks the region's poor economic prospects, these people said.

Most hedge funds are returning to winning ways in 2012 thanks to the rally in equity and bond markets and a bullish stance. The average hedge fund has risen 5.03 percent from the start of the year up to March 15, according to the HFRI Fund Weighted Composite Index.

Bullish funds have benefited from the European Central Bank's one trillion euro cash injection into the financial system and greater confidence that policymakers have finally stopped the Euro zone debt crisis from spiralling further out of control.

But some macro funds are positioning themselves for a new downturn in Europe, at the same time as they see an improved economic outlook for the U.S.

Many have bought options linked to volatility, which will rise in price if there is a resumption of the panic that racked markets for most of 2011, people familiar with the sector said.

"A lot of these funds think all this quantitative easing is just a temporary fix and the underlying problems are still there," one of the macro-investors said.

Macro funds make money by wagering how economic trends will play out across asset classes including in rates, currencies, commodities and equities, and are among the best-known.

Well-known funds in the sector include Brevan Howard, Moore Capital and Tudor Investment, as well as George Soros' Quantum Fund, where O'Shea used to work as a macro trader.

COMAC has made several successful calls in the past. It returned 5 percent in 2011 compared with a fall of more than 5 percent booked by the average fund.

It has returned an annualised profit of upwards of 8 percent since its 2005 inception, data seen by Reuters shows.

O'Shea, who read economics at the University of Cambridge, also performed well in 2008 after several successful bets including one on falling U.S. interest rates.

According to its website, COMAC invests across global markets to try and capture "directional market movements that commonly have a strong fundamental reasoning based upon economic and political analysis."

Investors looking for protection against volatile and uncertain markets have made macro funds among the most popular strategies this year.

In a recent survey conducted by Credit Suisse, investors said macro was the most sought-after strategy in 2012, while also predicting that they would be the best performing.

COMAC declined to comment.

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Commodity funds BlueGold, Clive miss out on oil rally

* BlueGold down 2 percent on first two months of year

* Clive up 3 percent, but trails broader market returns

By Barani Krishnan

March 16 (Reuters) - At least two major commodity funds have missed out on this year's oil rally, one of the energy market's biggest since the financial crisis, market sources said.

BlueGold and Clive Capital, both based in London and known for taking big bets on oil, have relatively weak returns to show for the first two months of the year when crude prices put in one of their strongest two-month performances since 2009.

Trade data shows that some major speculators, including hedge funds, have started building bearish positions on U.S. crude.

Oil prices have been range-bound since the start of March, indicating the run-up that accelerated last month on supply worries and improving U.S. economic data may have lost steam.

BlueGold, which has more than $1 billion in investor funds and is known for its focus on oil, is down about 2 percent on the year. The fund, led by former Vitol trader Pierre Andurand, logged a 1.5 percent loss in January and a half percent drop in February, according to people who have seen its performance data.

Clive, which has about $4 billion under management, is up about 3 percent for the year, after a gain of around 4 percent in February that offset January's 1 percent drop, industry sources said. Clive, led by ex-Moore Capital trader Chris Levett, is also a significant player in metals. But it gained attention in May last year for losing about $400 million in a week on oil after panic selling in crude markets.

This year's star among oil funds appears to be Andy Hall's Astenbeck Management, up more than 13 percent so far, according to an investor in the fund. Astenbeck, based in Connecticut, manages about $5 billion. The better returns mark a rebound for the fund after its first ever annual loss in 2011.

Astenbeck's numbers are not only better than BlueGold's and Clive's. They also outshine the average energy hedge fund, which is up about 8 percent cumulatively for January and February, according to data compiled by hedgefund.net. The broader hedge fund universe, which manages a total of $2 trillion, is up about 6 percent.

Sources that track BlueGold and Clive said managers at the two funds appeared to be deliberately staying nimble with their oil positions, possibly due to skepticism about the rally's staying power.

U.S. crude prices are up 6 percent on the year. Gains in London's Brent crude are more than double that, rising 15 percent.

"They haven't exactly told their investors or anyone for that matter that they don't believe the way this market has been going," said a source who receives performance and other data issued by BlueGold and Clive.

"But their lack of bullish exposure indicates they are ready to pounce the other way the moment prices turn, if they're not already shorting the market that is," added the source.

BlueGold and Clive could not be reached for comment.

Hedge funds and other money managers raised their short positions in futures and options linked to U.S. crude by the equivalent of more than 17 million barrels in the week ending March 6, according to the Commodity Futures Trading Commission.

It was by far the largest addition to short interest in nine months, since the first week of June 2011, when hedge funds and other investors raised their short positions by the equivalent of almost 22 million barrels, in the aftermath of last May's sudden market crash.

Shorting the U.S. oil market remains strictly a minority interest, however. The overwhelming majority of hedge funds remain bullish on the market given its more limited gains since the start of the year compared with Brent. Hedge fund long positions amount to nearly 326 million barrels of oil, compared with just 45 million worth of shorts.

"I know a lot of people who want to be bearish. But the oil price keeps going up, and up, and up, so it's kind of hard for them to take major exposures," said an analyst who speaks regularly with commodity hedge fund managers.

Oil prices have largely run up on investor fear about sanctions on Iranian oil due the Tehran's ongoing nuclear conflict with the West. A slow and steady improvement in the U.S. economy and jobs market have also underpinned gains.

But since February's outsized run that added 10 percent to Brent futures and 9 percent to U.S. crude prices, the market has advanced little. Brent has been trapped at around $125 a barrel while U.S. crude trades faces strong resistance at $110.

"We're at very high levels already, and it'll require another major market shock to propel us further," said Stephen Schork, editor of the Schork Report, an industry newsletter.

"By the same token, if there's any peaceful resolution to the Iranian conflict, we could see a very quick and significant downdraft in prices," said Schork, who estimates a risk premium of at least $15 a barrel over Tehran.

In Thursday's trading, Brent prices initially fell $3 a barrel before paring losses towards the close on news that Britain had agreed to cooperate with the United States in releasing strategic oil reserves later this year.

Fears about demand destruction in fuel could be another reason for fund managers' hesistancy to jump onto the oil rally bandwagon.

The national average for a gallon of regular U.S. gasoline rose to $3.8148 on March 9, according to the survey of gasoline retailers in the continental United States. In the final week of December, the price was just around $3.26.

In the euro zone, motorists are already paying record high prices for gasoline, at above $8 per gallon in euro terms.

"Before the crash of 2008, everything was going up on the belief that the global economy could support anything," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

"Now we know that prices can only rise so much before something has to give."

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Hedge fund managers looked to tech in 4th quarter

(Reuters) - Last year was a dismal one for many U.S. hedge fund managers, but based on their year-end stock holdings, some managers were well positioned to take advantage of this year's strong start in the equity markets.

Thomas Steyer's Farallon Capital Management, for instance, added about 1 million shares of Qualcomm Inc (QCOM.O) in the fourth-quarter. Shares of the telecommunications equipment manufacturer are up 12 percent in 2012.

Barry Rosenstein's Jana Partners loaded up on 650,000 shares of Netflix (NFLX.O) in the fourth quarter, when the Internet TV and DVD delivery company's shares were taking a pounding. It was a shrewd move: The company's shares are up 77 percent this year.

Managers including David Einhorn of Greenlight Capital and David Tepper of Appaloosa Management loaded up on shares of Apple Inc (AAPL.O). Shares of the tech darling have been on fire this year, rising to an all-time high of $509, a 26 percent increase since the start of the year.

But not every manager was as foresighted.

Philippe Laffont's Coatue Management decreased its stake in Apple by 54,000 shares to a total of 1.28 million at the end of last year.

The quarterly disclosures of manager stock holdings -- in so-called 13F filings with the U.S. Securities and Exchange Commission -- is always intriguing for investors trying to divine a pattern in what savvy traders are selling and buying.

But relying on the filings to develop an investment strategy comes with some peril because the disclosures are backward looking and come out 45 days after the end of each quarter.

Still, the filings can offer a glimpse into what hedge fund managers saw as opportunities to make money on the long side. The filings don't disclose short positions -- bets that a stock will fall in price. And there's also little disclosure on bonds and other securities that don't trade on exchanges.

The SEC also permits managers to omit sensitive stock positions from 13F filings upon request. As a result the public filings don't always present a complete picture of a manager's stock holdings.

Here then are some of the hot stocks and sectors in which hedge fund managers either took new positions or exited from in the fourth quarter.

HEALTH CARE

Louis Bacon's Moore Capital Management got rid of its 2.7 million shares of Pfizer Inc (PFE.N), which had been one of the hedge fund's largest positions in the third quarter.

He wasn't alone. George Soros's Soros Fund Management cut shares of Pfizer to 22,837 from 666,700 shares in the third quarter. Mark Kingdon's Kingdon Capital also reduced its Pfizer position, shedding some 200,000 shares in the period.

FINANCIALS

John Paulson's Paulson & Co made some notable changes in financial stocks, which had caused him to stumble badly last year. He no longer listed Citigroup (C.N), in which he owned 25 million shares at the end of the third quarter. And he trimmed his stake in Capital One Financial Corp (COF.N), after adding shares during the third quarter. At the end of the fourth quarter he owned 13.3 million, down from 22.2 million.

Paulson, in the fourth quarter, also got rid of its remaining 64 million shares of Bank of America, a stock that had been one of the hedge fund's most problematic last year.

Eric Mindich's Eton Park accumulated 20 million shares of Bank of America (BAC.N) in the fourth quarter, putting his fund in line to benefit from the 48 percent surge in the Charlotte, North Carolina lender's stock this year. In the third quarter, Eton Park only had a call option on 2.5 million shares of BofA stock.

Conversely, Caxton Associates reduced its holdings of BofA shares from 9 million shares in the third quarter -- its largest holding by market value -- to 615,700 by the end of the fourth quarter.

Famed short-seller James Chanos' Kynikos Associates opened a long position in JPMorgan Chase (JPM.N) by accumulating 145,000 shares of the big bank.

Dinakar Singh's TPG-Axon Capital Management also took a new stake in JPMorgan, adding 2.6 million shares in the fourth quarter.

TECH

Apple was the flavor of the fourth quarter. Soros, Einhorn and Tepper increased their exposure right ahead of Apple's roughly $100 a share run-up this year.

Appaloosa raised its share stake in Apple by 377 percent to 181,850 shares; Greenlight bought 150,000 shares to end the quarter with 1.5 million shares, while Soros increased its exposure to 95,000 from 83,417.

Moore Capital and Dan Loeb's Third Point dramatically upped their stake in Yahoo (YHOO.O), with Moore's exposure at 1.3 million shares by the end of December from 172,000 shares in the third quarter. Third Point increased its stake in Yahoo to 56 million in the fourth quarter from 48 million.

Marvell Technology Group (MRVL.O) attracted some fans as well. Greenlight Capital added more than 700,000 shares while Maverick increased its exposure from 15.1 million in the third quarter to 19.9 million by the end of December. Third Point entered in a new stake of 10 million shares in Marvell.

Jana upped its position in travel search company Expedia (EXPE.O) to 3 million shares from 980,000 in the third quarter.

Eton Park increased its stake in online auction firm Ebay (EBAY.O) by about 750,000 shares.

IPOs

Coatue took on 50,000 shares of online coupon company Groupon (GRPN.O), which went public in November.

Chase Coleman's Tiger Global Management acquired 325,000 shares of Michael Kors (KORS.N), a high-end retailer that went public in December.

HOUSING

Pershing Square Capital Management's William Ackman appeared to turn his back on the housing market when he no longer listed home improvement store Lowes Companies Inc. (LOW.N) on his quarterly filing. At the end of the third quarter he owned 21.2 million shares.

MOMENTUM STOCKS

Coatue, one of the 10 biggest owners of Green Mountain Coffee Roasters (GMCR.O), cut its position in half in the quarter, leaving it with about 2 million shares. Shares of Green Mountain, which tumbled about 50 percent in the fourth quarter, have roared back 45 percent this year.

Meanwhile, Patrick McCormack's Tiger Consumer Management more than doubled its stake in Green Mountain in the fourth quarter to 1.29 million shares.

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Wife of toppled Swiss bank chief was "risk-taker"

It was at hedge fund Moore Capital in New York that she first made a name for herself and met future husband Philipp Hildebrand, who resigned on Monday as head of the Swiss central bank due to a lucrative currency trade Kashya made weeks before he imposed a curb on the value of the Swiss franc.

Hildebrand told a news conference that he decided to quit after weeks of media pressure because he realised he could not prove that he had no prior knowledge of the trade when his wife initiated it last August.

Very little is known about the 50-year-old woman at the heart of a scandal that has shaken Switzerland, raised questions about its sacred bank secrecy and pushed out its slick young bank governor at a critical time for the country.

But Reuters was able to piece together a picture by talking to several people who know her well, including her brother and several artists who have worked with her.

Kashya's brother Daneyal Mahmood, a gallery owner who lives in New York, uses words like "fearless" to describe his sister, who studied economics at Boston College before moving to New York.

"She was a good student, but I would not say exceptional. Kashya is far more pragmatic and action-oriented. Kashya's genius emerges when you let her loose in the world. I would definitely describe her as a self-made woman," Mahmood told Reuters.

People who have worked with her gallery are full of praise for her drive and willingness to "follow her gut" on artists who might not seem commercially viable.

"She is quite bold, taking on things that others might shy away from," said Gabrielle Senza, who worked with Kashya in 2006. "She's willing to take that risk."

It was this strong-willed, independent streak which may have been behind the currency trade that backfired so badly on her and her 48-year old husband.

Philipp Hildebrand himself touched on this at a news conference last week at which he denied any wrongdoing and vowed to stay in his post.

"We married relatively late, and from the beginning our marriage has always been, how shall I put it ... Well, let's say my wife is a strong personality," said Hildebrand.

"FELT GOOD"

Kashya herself told Swiss television that she "felt good" about the trade, in which she used 400,000 Swiss francs to buy dollars because she believed at the time the dollar was "ridiculously cheap".

She seems to have been oblivious to the fact that the transaction might compromise her husband, who as central bank governor was privy to confidential market-relevant information.

Hildebrand said he learned of the purchase a day later, and auditor PriceWaterhouseCoopers said Hildebrand informed the couple's bank, Sarasin, that future deals would require his approval.

For good measure, he copied in the SNB's compliance department, which ruled on Sept. 7 that there should be no repeat of such trades. A day earlier, Hildebrand announced a cap on the Swiss franc, which had surged on fears over the euro zone debt crisis and economic threats outside Europe.

Kashya sold dollars for francs on Oct. 4, by which time the U.S. currency had rebounded substantially against the franc.

Daneyal says his sister takes after their mother, Katharine Shepard Salter, an American from Wisconsin who loved to travel and settled in Pakistan after meeting her husband, a colonel in the army.

After their father died in a car accident in 1967, her mother moved the family from Rawalpindi, a dusty, bustling city near the capital Islamabad, to suburban Connecticut.

Kashya graduated from Boston College in 1983 and moved to New York, where at first she did menial temp work while living above a fish market in the Hell's Kitchen area of Manhattan, her brother recalled.

LOVED THE PACE

Eventually she signed up with Moore Capital, a new hedge fund. She stayed there for 16 years, meeting Hildebrand after he joined in 1995.

"She had a research position and worked all night until dawn keeping an eye on what was going on in the international markets," Mahmood said. "She loved the pace and the people at Moore Capital."

The couple moved from London to Switzerland after Kashya became pregnant, and their daughter was born in 2000.

The following year, Kashya opened her first gallery in Geneva, where Hildebrand was working for Union Bank Privee, before expanding in 2003 with a space in New York.

After Hildebrand joined the Swiss National Bank in 2003, Kashya moved her gallery to Zurich and built up a reputation for fostering emerging talent, particularly from the Middle East and Asia.

After taking over as SNB president two years ago, Hildebrand hung a large painting of grey and brown stooped figures by Tianbing Li, a Chinese artist represented by his wife's gallery, in his office.

"The art world intrigued me," Kashya once told art magazine Canvas. "Given my success with my former career on Wall Street, I had enormous enthusiasm, self confidence and ambition and felt that this new aspiration was realistic."

On Monday, following the resignation of her husband, she struck a more somber tone, apologising to the Swiss people, the central bank and to her husband for what she called an "error in judgement".

"I am deeply remorseful for my own behaviour and my lack of recognition for its ramifications," she said. "I have an infinite respect for the institution and this wonderful country and am deeply sorry for the distraction and agitation I have caused." (Reporting by Katie Reid in Zurich and Tim McLaughlin in Boston; Additional reporting by Catherine Bosley in Zurich and Martina Fuchs in Dubai; Writing by Noah Barkin and Emma Thomasson; Editing by Hugh Lawson)

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PROFILE-Philipp Hildebrand's very Swiss finish

The 48-year-old former hedge fund manager's two-year chairmanship of the Swiss National Bank was rocky at best. He had faced down calls to go after he ran up record losses in 2010 to try to halt the rise of the Swiss franc, an effort which cost the central bank 26.5 billion francs.

His fortunes seemed to have turned last September when the SNB successfully set a cap on the soaring Swiss franc at 1.20 per euro. But it emerged last month that Hildebrand's wife Kashya, a former hedge fund trader who now runs a Zurich art gallery, had bought 400,000 Swiss francs worth of dollars three weeks before her husband oversaw those steps.

Hildebrand said he only learned of the trade the following day, rejecting claims that he had personally authorised the currency deal, which made a sizeable profit. But he told a media conference on Monday he could not provide final evidence that he had been unaware of the trade and had decided to step down to protect the credibility of the Swiss bank.

"I am sad to take this step, I loved this job, I fought like a lion for it," he said.

Hildebrand faced vociferous opposition to his tenure, driven mainly by Christoph Blocher, mastermind of the right-wing Swiss People's Party (SVP). Last year Blocher accused the SNB under Hildebrand of "megalomania or incompetence" for his attempts in 2010 to stop the franc's rise.

Besides the franc, the Swiss central banker was ambitious in his plans to make Swiss banks safer, pushing for particularly exacting new rules, which would go further than most other countries in Europe and the United States. Such plans for banks like UBS and Credit Suisse made him enemies at home.

At his farewell press conference on Monday, he said he was proud of what he had achieved, noting he had spoken out strongly and early in favour of the tough capital rules. "If you want to make enemies, try to change something," he said, quoting former U.S. President Woodrow Wilson.

Internationally, he was building an image as a trail-blazing regulator, only in November being appointed to the vice chairman of the Financial Stability Board, a post he will also relinquish.

"We all know that he is a man of total integrity, extraordinary ability and, most important of all, courage. Such people are rare. His country will miss him," Bank of England Governor Mervyn King said in a statement.

MARKET FORCES

When Hildebrand took over at the helm of the SNB in January 2010 after seven years as a board member, he was the youngest president in the history of the century-old bank. Born in the Swiss capital of Bern, he had studied -- mostly politics and international relations -- in Toronto, Florence, Harvard and Oxford.

Though he was no economist, Hildebrand knew the territory. His first real job had been with the World Economic Forum in Geneva, organising speakers from the financial services industry for its annual talkfest at Davos. They included George Soros, who had made his fortune betting against the Bank of England, and who helped him get a position at New York-based hedge fund Moore Capital Management, which specialised in speculating on interest rate futures and monetary policy.

As a young hedge fund manager, Hildebrand had in 1996 written a letter to influential Swiss newspaper Finanz und Wirtschaft, demanding that the SNB intervene to weaken an overvalued franc. "The markets are powerful but they often also allow themselves to be led," he asserted at the time.

He learned the value of perseverance at an early age, when as a freestyle swimming champ he narrowly missed qualifying for the 1984 Olympics. Swimming is a very good learning process for life, points out his former coach Anthony Ulrich. "It's an endurance-oriented sport," he says. "You learn to lose and keep your head above water at the same time."

Scarcely had Hildebrand settled into his new office at the edge of Lake Zurich -- hanging a favourite black and white photo of childhood idol Mohammed Ali on the wall -- when he was called into action. With the franc soaring again during the euro zone debt crisis, to around 1.4 per euro, Hildebrand ordered another round of massive interventions. Between February and May 2010, the SNB bought 147 billion francs in foreign currency, about a quarter of Swiss GDP.

AMBITIONS

The SNB is not the only central bank to have the problem of a strengthening currency. The combined firepower of the Group of Seven rich nations did succeed in stabilising financial markets in March, when their first joint intervention since 2000 stemmed a sharp rise in the yen in the wake of Japan's earthquake.

But Hildebrand had no such support. Switzerland's right wing said the government should have been more wary of appointing a former hedge fund manager with no qualifications in economics. After he stopped intervening, investors on world markets pushed the franc even higher. It hit a new record at almost parity with the euro last August before the bank set the cap, which has not been breached.

The success of that move put the Swiss People's Party on the back foot. In October, Blocher's party fared poorly in elections. It November it was tipped off about Kaysha's trades.

The currency struggle was just part of Hildebrand's ambitions. His 2010 forex intervention involved nearly a quarter of the country's GDP, but the risk posed by Swiss banks is much greater - their assets amount to at least six times the country's economy.

Hildebrand, who is credited with playing a central role in saving UBS from collapse at the height of the crisis, pushed for new rules to go further than most, with UBS and Credit Suisse needing a capital buffer nearly three times bigger than their global rivals.

He has been praised by the likes of Paul Volcker and Timothy Geithner and, along with Britain's top financial regulator Adair Turner, is seen as an innovator. The banks say high capital cushions will be costly to maintain and crimp lending.

Besides the banks, Blocher's anti-immigrant, anti-European Union party, now the biggest in Switzerland, wants parliament to limit the SNB's powers beyond ensuring price stability.

"Mr Hildebrand is not your average central banker. He is a very activist, self-assured national banker ... Swiss politicians can be very small-minded so an international star generally doesn't go down so well," Peter V. Kunz, professor at the Institute for Economic Law at Bern University, said last year.

In 2010, Hildebrand was also the world's highest paid central banker on 833,000 francs, and is rarely seen in anything but an elegant navy blue suit and luxury Breguet watch. Having spent much of his early adult life outside Switzerland, he lacks political allies at home. His towering 1 metre 94 stature gives him an aloof air, and his push for stronger regulations has raised hackles among a cosy Swiss elite more used to backroom deals and a strict code of preserving client secrecy.

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Morgan Stanley's Wisniewski quits to join hedge fund

Morgan Stanley's veteran head of European foreign exchange and emerging markets trading has left to join BlueCrest Capital Management, becoming the latest senior Morgan Stanley trader to join a hedge fund this year.

Marcin Wiszniewski, who has worked at Morgan Stanley for 14 years, has joined the $18.3bn (€13.5bn) London hedge fund as a portfolio manager on its $500m BlueCrest Emerging Markets Fund. He will join on May 10.

Wisniewski ran the desk since July 2008 when previous co-heads Bart Turtelboom and Karim Abdel-Motall were hired by London hedge fund firm GLG Partners to help replace Greg Coffey, who had joined Moore Capital.

Wiszniewski has been replaced at Morgan Stanley by Chris Nicoll, who has rejoined the bank as co-head of foreign exchange and emerging markets trading in Europe, following a two-year stint at $14.6bn hedge fund firm Moore Capital. Nicoll left Morgan Stanley for Moore Capital in July 2008 when he was head of European spot foreign exchange trading.

His new fellow co-head is Andrew Millward, who has been promoted after coming onboard earlier this year from JPMorgan. Nicoll and Millward report to Steve Mettler, global head of foreign exchange and emerging markets, and Rob Rooney, global head of interest rate, currency and credit.

Wiszniewski is the fourth senior trader to leave Morgan Stanley for a hedge fund this year, as remuneration and propietary trading comes under regulatory scrutiny, and some individuals seek the relative autonomy of a hedge fund compared to a large bank.

Eric Cole, who ran Morgan Stanley’s distressed sales, trading and research operation, is moving to Appaloosa Management, David Tepper's New Jersey firm that netted $7bn in 2009 for betting on battered financial shares. Morgan Stanley mortgage trader Ahsim Khan is set to join Brevan Howard, Europe's largest hedge fund firm, next month. He followed Morgan Stanley propietary trader Geoffroy Houlot, who joined the $30bn London firm in January.

BlueCrest has meanwhile seen assets grow almost 10% this year to $18.3bn on March 1 from $16.75bn at the end of 2009. It has benefited from inflows as investors put money back to work with established, blue-chip firms.

BlueCrest's largest fund, the systematic BlueTrend fund, which uses computer-driven models and manages over $9bn, returned 43% in 2008, when many of its peers took bad knocks to performance during the financial crisis, and was again up 4.3% last year, investors said.

Nicoll, Moore Capital and Brevan Howard declined to comment. BlueCrest confirmed the hire and declined to comment further. Morgan Stanley confirmed the appointments and declined to comment further.

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