A global lobby group representing hedge funds has repeated its backing for ground-breaking US legislation aimed at making these funds more open and accountable in a bid to improve confidence in the sector.

The Alternative Investment Management Association issued its comments after US lawmakers gave bipartisan support for a bill going through the US Congress requiring managers operating in the US to register with and be supervised by the Securities and Exchange Commission, the US regulator.

The Private Fund Investment Advisers Registration Act 2009 will make the registration of hedge fund managers in the US mandatory for the first time.

“We have supported the registration of managers in the US and elsewhere as well as the reporting of systemically relevant information to national authorities in the interests of financial stability,” said Todd Groome, AIMA chairman.

The bill now faces a vote on the floor of the House of Representatives, possibly early next month, before being sent to the Senate.

“Registration of hedge fund managers and the supervisory dialogue that this creates between managers and the authorities is valuable, but it is not a costless exercise. It is important that the reporting of market information in the interests of financial stability focuses on relevant information and is consistent with the supervisory capacity of national authorities; managers should not be burdened with expensive and unnecessary reporting requirements,” Mr Groome added.

“If we ask even smaller managers to provide such information, we run the risk of overwhelming managers and supervisors. It is a question of striking the right balance.”

The bill also has implications for non-US managers who could face “dual registration”, AIMA says. The lobby group wants a full exemption from registration in the US for non-US fund managers who are already registered in a “relevant jurisdiction”, such as those based in an OECD country or others especially where the domestic regulator may cooperate and share information with the SEC.