Typically, a financial institution is a provider of liquidity, issuing liquid liabilities to hold less liquid assets, using its capital to cover the liquidity risk and take a ride on the provision of liquidity is justification cost of capital employed.
The second concept, "market liquidity" refers to the ability to make transactions in order to adjust portfolios and risk profiles without disturbing the underlying price.
In this regard will be developed in the following the following problem: What is the impact of hedge funds on financial markets.
The answer to this question will be taken in two parts: In the first chapter, we develop the contribution of hedge funds to see them as instruments of efficient markets.
"The hedge fund industry has grown strongly and hedge funds have become an increasingly important diversification for investors and liquidity for the markets.
The institutionalization and increasing customer sophistication of management and risk controls within the largest hedge funds have, in many ways, contributed make them important players in financial markets." (Draghi 2007, p.44) Adaptation between the financial market and hedge funds is faite.En effect, must be recognition of the blessed formed by hedge funds on financial market efficiency (2007 Walnut) The atypical nature of hedge funds has raised many questions about the consequences of their activity in financial markets." Ie that the prevalence of a financial system that is able to ensure a sustainable manner, and without major disruptions, an efficient allocation of savings to investment opportunities.Indeed, this contribution is measured by injecting liquidity in large volumes, the price discovery and spread of risk that enhance the efficiency of financial markets and here we talk about hedge funds as a stabilizer system Financial.It is difficult to define what a hedge fund to the extent that there is no real definition, that is why we returned to the general definition of Capocci Daniel: "A Hedge fund is a private investment using a wide range of financial instruments such as short selling of equities, derivatives, leverage, arbitrage, and this in different markets.Generally, the managers of these funds to invest part of their resources and are paid according to their performance.This reflects a misunderstanding of the real mode of operation of hedge funds and their impact on the economy.For nearly twenty years, issues related to the operation of hedge funds and their impact on markets and more generally on the financial systems are gradually a field of study in its own right, rich body of literature. The latter appeared on 1 January 1949 when a certain Alfred W.Jones opened a formal background in action as a private company.Its aim was to provide flexibility and maximum flexibility in the creation of a portfolio.