The President’s Working Group on Financial Markets, formed under the auspices of the Department of the Treasury, will form two private sector groups to develop best practices for the hedge fund industry, Dow Jones reports.

The working group is suggesting the best practices in lieu of regulations. For one thing, it is suggesting market discipline will keep systemic risk at bay. “The market will benefit if experienced participants develop and implement best practices,” said Treasury Secretary Henry Paulson. The hope is that the best practices will impose some restraint on the industry without stripping it of innovation.

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