Apex Aims to Outmuscle Smaller Rivals with Additional Offerings
As institutional investors continue to pile into the European hedge fund space in the elusive search for alpha, strict new transparency and reporting requirements mean that a hedge fund’s choice of fund administrator to attract these stewards of long term capital has never been more critical.
New regulations in the form of MiFID II, Fatca and AIFMD to name but three are ramping up the pressure for hedge funds and others, such as fund managers, to comply with a gamut of new rules intended to bring in more transparency following the financial crisis. And all of this is happening when profit margins at many firms are still being squeezed as volumes have still yet to recover to pre-crisis levels.
“For most of our clients—be it fund managers, family offices or hedge funds—their primary purpose is to generate investment returns and any other operational or administration tasks are an unwanted distraction,” said Paul Spendiff, managing director of Apex Technologies, a division of Apex Fund Services, one of the world’s largest fund administration companies.
“Keeping up with the ever-changing regulatory environment can require continuous monitoring and firms are already under cost pressures themselves. They are looking to lower costs so they need to find an edge wherever they can. If we can help their process of generating alpha then that is good for them and good for us as a fund administrator.”
And in today’s more transparent environment, it is this choice of fund administrator that could mean a hedge fund either winning or losing a prospective institutional investor.
“Fund administration is an increasingly significant part of the fund reporting process,” said Spendiff. “Increasingly fund managers are looking to their administrators to help them drive down costs while at the same time increase efficiencies by integrating reporting services with their other business functions.
“There are a limited number of administrators that are prepared to make the necessary investment to offer a full range of fund services—such as an integrated investment and reporting solution—that the serious hedge funds need.
“Institutional investors are demanding more transparency nowadays. There are far fewer people investing in start-ups and the smaller funds. Institutional investors are almost looking for an excuse not to invest.
“If you’ve not got a proper risk management system in place, if you’ve not got a good audit trail, if you’re not in a recognized jurisdiction, you don’t have a prime broker who the institutional investors are comfortable with and if you’ve not got proper IT and disaster recovery systems in place then institutional investors generally aren’t interested.”
Spendiff added: “There is this glass ceiling developing for the smaller fund administrators such as the two-man or 10-man shops out of Ireland, the Channel Islands or Bermuda. You soon won’t have the spread you do now as there will just be the tier ones and the also-rans as they can’t offer the things Apex does like multiple jurisdictions and high-quality technology solutions.”
Apex has recently launched a new service to offer fund managers a complete suite of technology solutions and third party services. It now offers an order management system (OMS), called Apex Trade Manager, and portfolio management system (PMS), called Apex Vision, that are fully integrated with Apex’s existing fund launch platforms, fund administration servicing and middle office functions.
Apex says that it provides fund managers with seamless services ranging from pre-trade compliance, trade execution and portfolio management, right through to NAV, risk and Ucits reporting.
“The launch of Apex’s OMS and PMS service is set up for two reasons,” said Peter Hughes, managing director of Apex Fund Services. “Firstly, to allow asset managers an affordable tool to ensure they meet the investable criteria of institutional investors. Secondly, to enable faster risk and performance reporting to our clients and their investors.”
Spendiff added: “Apex Vision is a powerful and market leading portfolio management system offering fully scalable real-time portfolio management, with detailed reporting tools that is equally adept for a $5m hedge fund or a $3bn fund manager or family office. Because it is fully integrated into the Apex fund accounting platform, Apex can now deliver true straight-through processing and web reporting.”
Apex now partners with organizations including Linedata, Pacific Fund Systems, Lazorne, Statpro, Newedge, Knight, RJ O Brien, EFG Hermes and Global Prime Partners to offer its clients access to the latest technology on the market.
CEDX opened on 6 September, offering contracts on Cboe Europe single country and pan-European indices.
The MOU covers certain security-based swap dealers and participants.
Equity underwriting on European exchanges rose 70% in the first half.
The analysis is based on transactions publicly reported by 30 European APAs and venues.
A similar service is available on the BIDS platform in the US equity market.