WASHINGTON ? The new chairman of the Securities and Exchange Commission, Christopher Cox, said he plans to implement a controversial rule that would apply a stronger government hand to the trillion-dollar US hedge-fund industry.

In his first extensive interview since becoming the top US market regulator, Mr. Cox struck a broadly cautious tone, suggesting he would ease up in general on issuing new rules and even reassess some existing regulations.

But while he said he wouldn?t make any radical shifts in the first few months of his tenure, he underscored the SEC?s watchdog function.

?It?s important always to monitor the effectiveness of regulation,? Mr. Cox said from the SEC?s new offices overlooking the US Capitol.

?If a particular approach is working well and is cost-effective, we should use it as a model. If another approach is unduly expensive and produces little in the way of worthwhile results, we should amend our approach.?

Mr. Cox, a 52-year-old former California congressman and onetime securities lawyer, appears to be trying hard to strike a careful balance: He doesn?t want to appear to be kowtowing to big business, which has complained that the SEC?s response to the wave of corporate fraud has been too heavy-handed. But he knows his predecessor, William Donaldson, drew the ire of the business community and White House by pushing through regulations over the objections of prominent Republicans.

Mr. Donaldson, a Wall Street veteran who resigned as SEC chairman two years before his term expired, ran into opposition when he proposed the rule requiring hedge-fund advisers to register with the SEC.

Mr. Donaldson believed the agency needed to get a handle on how the fast-growing industry operates, in order to potentially prevent fraudulent behaviour.

He pushed the rule through over the opposition of such heavyweights as Federal Reserve Chairman Alan Greenspan and Republican Commissioners Paul Atkins and Cynthia Glassman.

Critics of the rule said it was a first step toward further regulation of the industry and would do little to prevent fraud. The industry has exploded in recent years, with assets nearing $1 trillion.

At the same time, though, hedge funds have become embroiled in some recent scandals and the SEC has sued several for fraud.

Just last month, Bayou Management LLC, a Connecticut-based firm, collapsed, leaving questions about what happened to some $440 million it claimed it had in assets. The SEC is investigating the collapse.

Mr. Cox said the SEC can ?learn from? information collected under the hedge-fund rule and would implement it ?exactly as adopted?.

?There has been a 14-month transition period which is exceptionally long to ensure that implementation is not burdensome,? he said. ?In many cases, the investment advisers are already registered with the SEC.?