There should be a strong correlation between the information held by a counterparty about a hedge fund's risk profile and the terms on which credit is extended. The principles indicate that counterparties should seek quantitative and qualitative indicators of a fund's exposures to market and credit risk and its vulnerabilities to liquidity pressures from counterparties and investors.
When sufficient information is not forthcoming from a fund, a counterparty should correspondingly tighten its margin requirements and other credit terms. Since 1999, foundations, endowments, public and private pension funds, and other institutions have become an increasingly significant source of capital to the hedge fund sector.