Regulatory demands increase, but asset services step up to the plate
January 25, 2017
In the past few years, new regulations and reforms have been implemented, adding extra strain on hedge funds and other similar funds or companies. But third party firms offering asset services have been more than ready for this particular change in the financial climate.
Fund managers want to follow these new regulations
In the aftermath of the late-2000s financial crisis and the Bernard Madoff scandal, the U.S. government has done its part to prevent these things from happening again in the future. That is the reason why companies need to be compliant to the new regulations, which include, but are not limited to AIFMD, FATCA, and Dodd-Frank. And fund administrators have generally taken to these changes quite well, earmarking generous amounts of money in their budget for regulatory compliance. Usually, fund managers spend about five to ten percent of the operational budget pie on ensuring that these new regulations are met.
Hedge funds are among the most strictly regulated vehicles
In particular, it is hedge fund managers who have to deal with the most regulations, and would therefore need certain asset services more urgently. Sometimes, fund managers take the responsibility onto themselves, assigning compliance-related tasks to their in-house talent. That can work given the current requirements, but since these requirements can easily add up, or be changed with nary a moment’s notice, it can get challenging for in-house compliance teams to keep up with the trends.
Recent studies have also shown that the hedge fund industry wants to adjust to the changing regulations, with managers trying harder than ever to avoid legal problems that could cost their funds a lot of money. This requires a certain combination of asset services and technology, which can often be found through third party servicing solutions.
Outsourcing compliance tasks is preferable these days
Fund administration has changed and evolved so much since the pre-recession days, and managers are not just concerned about the performance of their funds, but also whether they are playing ball by the government’s rules. But a lot of fund managers have entrusted regulatory compliance to third party companies that specialize in asset services. These third party firms utilize best-of-breed technology, including cloud computing, to handle all types of reports and ensure all-around compliance and transparency, doing so with quickness and efficiency. Yet it is imperative that fund managers only go with companies that combine their top-level systems with years of experience and a solid reputation.
Fund managers want to follow these new regulations
In the aftermath of the late-2000s financial crisis and the Bernard Madoff scandal, the U.S. government has done its part to prevent these things from happening again in the future. That is the reason why companies need to be compliant to the new regulations, which include, but are not limited to AIFMD, FATCA, and Dodd-Frank. And fund administrators have generally taken to these changes quite well, earmarking generous amounts of money in their budget for regulatory compliance. Usually, fund managers spend about five to ten percent of the operational budget pie on ensuring that these new regulations are met.
Hedge funds are among the most strictly regulated vehicles
In particular, it is hedge fund managers who have to deal with the most regulations, and would therefore need certain asset services more urgently. Sometimes, fund managers take the responsibility onto themselves, assigning compliance-related tasks to their in-house talent. That can work given the current requirements, but since these requirements can easily add up, or be changed with nary a moment’s notice, it can get challenging for in-house compliance teams to keep up with the trends.
Recent studies have also shown that the hedge fund industry wants to adjust to the changing regulations, with managers trying harder than ever to avoid legal problems that could cost their funds a lot of money. This requires a certain combination of asset services and technology, which can often be found through third party servicing solutions.
Outsourcing compliance tasks is preferable these days
Fund administration has changed and evolved so much since the pre-recession days, and managers are not just concerned about the performance of their funds, but also whether they are playing ball by the government’s rules. But a lot of fund managers have entrusted regulatory compliance to third party companies that specialize in asset services. These third party firms utilize best-of-breed technology, including cloud computing, to handle all types of reports and ensure all-around compliance and transparency, doing so with quickness and efficiency. Yet it is imperative that fund managers only go with companies that combine their top-level systems with years of experience and a solid reputation.
Posted by Louie Drake. Posted In : Finance
