WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said Tuesday stiffer hedge fund regulation could make financial markets less stable, as he backed the current focus on ensuring hedge fund trading partners manage their risks well.

In his first comments on the subject since taking up the post Feb. 1, Bernanke argued the approach followed since the 1998 collapse of Long-Term Capital Management, which was seen as a threat to the broad financial system, has been effective.

"Authorities' primary task is to guard against a return of the weak market discipline that left major market participants overly vulnerable to market shocks," Bernanke said in remarks prepared for delivery at a conference in Sea Island, Ga., sponsored by the Atlanta Federal Reserve Bank.

"A risk of any prescriptive regulatory regime is that, by creating moral hazard in the marketplace, it leaves the system less, rather than more, stable," he said.

The Fed chairman did not address the outlook for the U.S. economy or interest-rate policy in his remarks, which were made available in advance in Washington.

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