More Hedge Fund Failures Likely, but Not Like Ltcm

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LONDON (Reuters) - The recent turmoil in financial markets could mean more hedge fund collapses, but any casualties are unlikely to threaten global financial stability in the way Long-Term Capital Management did in 1998. That is because the money hedge funds now borrow from banks to make bigger investments is a fraction of the amounts borrowed by U.S.-based LTCM, which according to some estimates was leveraged up to 100 times its assets.

"There are signs of a fear of systemic risk rearing its ugly head ... it is partly a function of liquidity providers feeling the pinch post the credit carnage," said Saleem Siddiqi, a partner at U.S.- based hedge fund firm Tapestry Asset Management. "But prime brokers are a lot more careful these days. . . . An individual hedge fund blowup by itself isn't going to derail the market."

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More Hedge Fund Failures Likely, but Not Like Ltcm

Prime brokerage divisions at major investment banks offer hedge funds settlement, custody and securities lending services and...

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