Michael Hintze, the founder of hedge fund CQS, has used his latest letter to investors to warn of the opposing nature of two of the biggest regulatory initiatives facing the markets: Basel III and Solvency II.

Hintze wrote that Basel III and Solvency II contain many aspects that are structurally opposed to one another: "Solvency II requires insurance companies to adopt a risk-based capital regime, but the consequences are that they will have to set aside more capital for longer duration and lower rated instruments at a time when under Basel III, banks need longer duration capital while their own rating are under pressure."