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Should private equity funds be further regulated?This paper examines the current concerns over the systemic risk posed by the fast-expanding private equity funds. Such worries appear to emerge as a consequence of controversies generated by private equity and hedge funds over their lack of transparency in asset valuations and use of excessive debts, and more importantly over their general manner of operation. While market imperfections feature to some extent, this investigation argues that these are not significant enough to warrant formal regulatory mechanisms. It further argues for the continuance of a light-touch regulatory framework, as this industry works best under a flexible governance framework. Additionally, this paper suggests that a shared commitment to the wider regulatory objectives by regulators, the regulated and their advisers through regular dialogues is likely to produce a more favourable outcome of appropriate market behaviour.