The large losses sustained last week by hedge funds in the wake of the downgrade of General Motors, the US automobile manufacturer, have led regulators across the globe to renew their focus on the $1 trillion (€800bn) market.

In the US, sources close to the Securities and Exchange Commission said it will be examining how hedge funds reacted in the wake of the downgrade and whether investors were adversely affected after a number of funds were hit by their exposure to GM.