Financial regulators across the world need to work together to keep checks on the increasingly powerful $1.2 trillion (810 billion pound) hedge fund industry, China's banking regulatory head said in remarks published on Thursday.

Regulators in all countries should strengthen the monitoring of hedge funds and be on alert against any counterparty and liquidity risks they introduce, Liu Mingkang, head of China Banking Regulatory Commission, said in a statement on the watchdog's website (

The notice followed meetings that Liu held with his counterparts from Singapore, Italy, Germany, Thailand and Hong Kong from September 16 to 26.

Liu suggested that regulators should exchange information about hedge funds promptly to make sure their trading does not cause regional or global economic instability.

Liu noted the increasing activity of hedge funds in Asian countries including China, India, Singapore, Hong Kong and Thailand.

His suggestion comes days after U.S. hedge fund Amaranth Advisors disclosed the biggest hedge fund loss ever, about $6 billion, on wrong way natural gas market trades.

China's central bank chief, Zhou Xiaochuan, has also been urging closer scrutiny of hedge funds.

At the International Monetary Fund annual meeting in Singapore earlier this month, Zhou said IMF member governments needed to strengthen their control over hedge funds to ensure no harm comes to financial markets.

On Wednesday, the U.S. House of Representatives passed a bill calling for a federal study of hedge funds, marking the latest step in the government's effort to come to grips with the industry.