Archives

Vendor appraisals

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).



Data management

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.



Conclusion

The roll out of Mifid II has not been comfortable for hedge fund managers, and it is clear from our... Read More



Research Unbundling

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.



Lay of the land

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.



Introduction

Executive Summary Mifid II has generated numerous headlines in the past 12 months, not least in HFM publications, and few... Read More



Mifid II Progress

A look at the challenges faced and battles won by hedge fund managers and vendors affected by recent EU regulation



Conclusion

The chief compliance officer (CCO) is a vital, thriving, senior role within the contemporary hedge fund industry. It is created... Read More



External help

For the smallest managers the compliance consultant is oft en in effect their CCO, and for larger managers, too, third parties play an important role in keeping everything shipshape. But identifying the right provider can present greater challenges than managers might expect. The Insights team wanted to identify the tasks managers are most likely to outsource to their consultant, those they are most likely to keep in-house and the key factors they consider when choosing a new provider. HFM investigates these trends and more in this final chapter.



Hiring and remuneration

Hiring new staff is one of the greatest challenges faced by executives in any profession, compliance included. And in the hedge fund industry it is getting harder still. Has the introduction of new regulatory regimes had a significant impact on hedge fund managers’ compliance hiring intentions? Mifi d II, for example, has certainly increased the workload for managers operating under its purview. In section three, the Insights team seeks to ease the task of hiring for managers on the lookout for compliance recruits.



The Challenges

As a compliance professional, keeping you and your colleagues up-to-date with new regulations and responsibilities can seem an endless challenge, and one that has grown in line with the increasing complexity of the regulatory environment. Relevant information can come from many sources but which is the most effective for managers? Which compliance professionals are struggling with communication issues when interacting with their teams and how do these issues change as the firm grows? All this and more is covered in this report’s second section.



The Role

The trend for hiring designated compliance staff and, beyond that, a dedicated chief compliance officer (CCO) is well known. However, little actual data exists on the extent and nature. How many compliance staff does the average hedge fund manager employ? How many managers have a dedicated CCO and what are the factors influencing their decision to create the role? These are some of the key questions addressed in our opening section as HFM seeks to quantify the scale and scope of the hedge fund compliance role.