It may verge on understatement but the world economy and financial markets face gargantuan challenges during a period when growth is anaemic and stability may be elusive. Throw in a rising regulatory backlash, particularly in Europe, and the stage is set for some dramatic changes in how hedge funds are permitted to operate in the future.

Todd Groome, who became non-executive chairman of the Alternative Investment Management Association (AIMA) in February, is grappling with these challenges. It is a battle that will draw on his recent five-year advisory role with the International Monetary Fund and earlier capital markets roles with Deutsche Bank and Credit Suisse.

Groome has some key messages about how the alternative investment sector is changing. What’s more, he matches that analysis with what hedge fund mangers need to do to be relevant in the changing order of financial markets regulation.

On this point, Groome says that the industry’s main representative bodies must pull together and endorse a common platform of standards. Initially, this means pulling together a road map and committing to a date – the November G20 finance ministers is a possible deadline – to achieve consensus.

“The Americans and the British need to come together and work with the G20,” Groome says. “AIMA’s contribution to that is that the industry needs to come up with a global set of standards to convergence around the very good standards that are already out there.” He notes that the Hedge Fund Standards Board took AIMA’s standards and made them even more specific. Also, the President’s Working Group worked with the US Treasury and the Managed Funds Association to put together two guidelines, one for managers and one for investors, while the International Organization of Securities Commissions had done extensive work on valuations.