He suggested that the recent explosive growth of hedge funds was a response to technological advance and the innovation and specialisation that allowed. It was also part of a wider shift towards arms length finance. He concluded: “In the long term that shift should be good for stability”. Adding detail, he said “The active trading of hedge funds makes markets more liquid and facilitates genuine hedging activity by others – including systemically important banks. Increasingly, hedge funds – led by those managed from London – have become an important part of the risk transfer process”.