The Financial Services Authority is expected to double the number of hedge fund managers it subjects to special supervision next year, according to industry sources.

A managing director at one of Europe's largest prime brokers, which finance hedge funds' trading, said the UK regulator was going to expand its surveillance from 25 groups containing 35 firms to 50 or 60 groups. "The hedge fund monitoring team has been a success and the FSA will be increasing its work in this area," he said.