The Financial Services Authority has published a report that set out the results from its latest Hedge Fund Survey (carried out in September 2010) and Hedge Fund as Counterparty Survey (carried out in October 2010). The report highlighted that risks to financial stability from hedge funds could crystallise through two potential channels: market dislocations that disrupt liquidity and pricing (the market channel); and/or losses in hedge funds leading to losses by banking and other counterparties (the credit channel).The report stated that the latest results suggest that the footprint of surveyed hedge funds remains small within most markets and leverage is largely unchanged, so that risks to financial stability through the market channel seem limited at the time of the latest surveys. In addition, counterparties have increased margin requirements and tightened other conditions on their exposures to hedge funds since the crisis, increasing their resilience to hedge fund defaults. Nevertheless, some risks to hedge funds remain, particularly if they are unable to manage a sudden withdrawal of liabilities during a crisis period, potentially resulting in forced asset sales.