Managers do not need to have actively marketed in a country or region to have a sense of how difficult and/or costly it would be to do so. Many jurisdictions, including notable examples in central Europe, have been adjudged prohibitive to hedge fund products in the court of popular opinion – but to what extent are their reputations justified? This section compares the opinions of managers who have marketed in a jurisdiction with those who have not to answer this very question. Furthermore, we help identify key actions managers can take when smoke does indeed mean fire.
As economic growth and development charge ahead in the Asia-Pacific region, newly minted millionaires are setting up family offices, and institutional investors are seeking to diversify their portfolios. As a result, hedge funds are gaining more traction in the region and are expanding their marketing operations. In this third section, the Insights team looks at which jurisdictions are easiest to operate in and examines the regulatory pitfalls and challenges of the Apac region and how to overcome them.
European regulators may have spent the last decade trying to standardise alternative asset management regulation, but marketing and distribution remains an area of considerable variation and frustration, teeming with quirks unbeknownst to foreign fund managers. For our second section, HFM seeks to identify the European jurisdictions that managers are most wary of, the ways they are considered prohibitive, and the extent to which managers of different sizes and from different regions are affected. We also seek to measure the extent firms are profiting from reverse enquiries.
The hedge fund industry’s footprints in Europe and Asia-Pacific are no doubt large, but such is the eclectic mix of markets in both regions that they are also somewhat muddied. After all, a manager’s presence within a given region or market can be measured in several ways. In this report’s opening section, we provide data on managers’ official offices and local staff, as well as their regulatory and marketing licenses. Ultimately though, our focus boils down to two key questions: how many managers are actively marketing and how many are making plans?
Problems with third-party Mifid II solutions dogged hedge fund managers in the run up to implementation and have lingered thereafter. From sub-standard and flawed services, to incomplete solutions being rushed to market, operations staff have made their feelings known. But are the headlines reflective of wider sentiment? After all, a disappointed client is more likely to voice their experience than a satisfied customer. This section explores these issues and more, focusing on two key processes: Authorised Reporting Mechanisms (ARM) and Transaction Cost Analysis (TCA).
The EU’s new data protection rules, General Data Protection Regulation (GDPR), have further complicated managers’ efforts to address the tenets of Mifid II – and not just firms headquartered in Europe. From the challenges of and solutions to GDPR, to the extent to which managers are recording staff communications, this third section explores the ways managers are affected by the EU regulation and the precautions managers all over the globe are taking to ensure compliance.
One of the key pillars of Mifid II, research unbundling poses questions for a particularly wide range of managers, including AIFMs and Ucits ManCos operating in the UK thanks to ‘gold plating’ by the local regulator. Should research be charged to the fund or firm? Should it be unbundled globally or just in the EU? And, perhaps most importantly, how much ought a manager pay for a service previously provided free of charge? These issues and more are addressed in our second section.
The initial consultations on the second iteration of the Markets in Financial Instruments Directive (Mifid) began in 2010 and came hot on the heels of another directive affecting hedge fund managers, AIFMD. This first section of HFM’s Mifid II themed report seeks to measure the directive’s impact on the hedge fund industry by looking at the proportion of firms that hold a Mifid licence, the location of these firms and the actions they have taken in response to the directive.
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