It’s a given that hedge fund managers consume data — and lots of it — to ensure the most lucrative trading strategies and efficient post-trade processes. They need to know just how the global market is moving at every fraction of a second every business day and just which transactions must be cleared and settled […]
Legal Entity Identifiers: Scrutiny of EU Firms Tightens
When the concept of a new global legal entity identifier first took shape among regulators in the US and across the globe, it was hailed as a brilliant revolutionary move. Financial firms and trading counterparties could now be appropriately identified and tracked by regulators seeking to mitigate systemic risk. No longer would they have to […]
Hedge Fund Accounting: Beyond a Shadow of a Doubt
With eagle-eyed institutional investors needing assurance of the accuracy of hedge funds’ operations, as well as their returns, keeping books and records is no easy one-shot deal. No matter who serves as the official fund administrator, back-up verification or “shadow accounting” has already become the modus operandi for the largest funds and is quickly taking hold among smaller ones. Over 75 percent of hedge […]
WAMCO Fine: A Coding Error or Compliance Breakdown?
A computer coding error. That’s how most media outlets explained one of the key reasons the US Securities and Exchange Commission and the US Department of Labor whammied a large US fixed-income fund manager with a US$22 million fine. The second is inappropriate cross-trading which unfairly benefited one group of clients at the expense of others. But […]
Private Equity Managers: Data Becoming a ‘Four-Letter Word’?
Private equity fund managers are starting to crack under the pressure of finding data and turning it into useful intelligence for investors and regulators at record speed, say investment operations experts. Although many of them can ill afford it, they will eventually have to invest in the necessary data infrastructure for the same reasons as […]
EMIR: One Little Number Can Make or Break Reporting
With the European regulatory requirements for reporting exchange-traded and over-the-counter swap transactions less than a month away, fund managers can’t afford a leap of faith that they will be ready, warn regulatory and operations experts. There is a key nagging issue they must resolve before February 12: just who will create the 52-character unique trade […]
Europe’s AIFMD: Will US Fund Managers Bite or Should They?
The EU’s new Alternative Investment Managers Directive (AIFMD) is supposed to give alternative investment fund managers the same cachet as their traditional investment manager peers following UCITS. Or so, European regulators think. But the allure of AIFMD appears to have been lost on a critical sector of the alternative funds market. US fund managers aren’t […]
Margin Standards for TBAs May Edge Funds Out of the Market
Despite a six-month reprieve from collateralizing their US forward-settling agency mortgage-backed securities trades, many fund managers may be dismally unprepared for new margining standands, and shut out of the market. The answer won’t come easy or cheap: either upgrading or installing collateral management systems will be required. Then comes the cumbersome process of redrafting contracts or writing […]
Harmonizing European Depositories May Be a Bumpy Ride
In trying to harmonize the operations of European securities depositories, regulators may well be creating unintended operational and financial burdens for the settlement houses and their members in dealing with trades which fail to settle on time. “The shorter timetable for settlement and the fines for late settlement will be far more difficult to implement […]
Reconciliation Moves Into Fee Accounting
Once viewed strictly as a matter of matching up cash, positions and transactions, the middle-office task of reconciliation is quickly moving into the trade-execution and post-trade space. The reasons are self-evident: not only are regulators demanding better control of operational risk, but C-level management are requiring more precise analysis of the bottom line for each unit. “It’s all […]