Mr Snow wants more hedge fund rules

Hedge funds are sophisticated financial instruments usually used to bet or "hedge" against falls and rises in share markets and currencies.

During a visit to Germany, Mr Snow said the US Securities and Exchange Commission was working towards ensuring hedge funds were made more transparent.

Germany's Finance Minister Hans Eichel echoed Mr Snow's call.

German example

Mr Snow said the US financial watchdog was now working on beefing up rules for hedge funds.

"We need to continue to monitor hedge fund developments in the US," he said.

"They are becoming a larger force...changing what they do and how they operate, including their customer base."

German Chancellor Gerhard Schroeder recently said he planned to propose strengthening international controls on hedge funds at next month's G8 summit of the world's leading industrial nations in Scotland.

Mr Schroeder's comments came after pressure from foreign investors, including hedge funds, led to the resignation of former Deutsche Boerse chief executive Werner Seifert.

Mr Seifert quit after failing to persuade investors to back his ultimately unsuccessful plan to takeover the London Stock Exchange.