Data Issues Dog Administrators
Form PF highlights aggregation and workflow issues.
The final rules of Form PF announced by the SEC have opened up a whole new era for hedge fund and private equity businesses, which will now be forced to disclose more information to the U.S. government than previously required.
Form PF requires a voluminous amount of data that a fund manager needs to report to the SEC on a period basis (quarterly if regulatory AUM is over $1.5 billion), and in a portfolio rather than transaction configuration.
Fund administrators will be a major data source, but that data will require additional work to become Form PF ready.
Form PF requires reporting on data not normally collected by fund administrators such as financing/margin information, components of the offering memorandum such as investor liquidity, custodian/PB/Counterparty account details, risk metrics, etc.
“Form PF is not just about data or even data crunching,” Jonathan White, business development manager, North America, at Viteos Fund Services, told Markets Media.
“It’s about different data and reporting in an entirely different way. And that will require either a build or buy.”
Data includes position, financial, trade, risk and investor information. This incorporates an aggregate of all regulatory assets under management, combining data from multiple data sources, tracked historically and normalized to the way the SEC wants.
Form PF will represent a different challenge for each hedge fund business, driven by the fact that no two businesses have the same view of the world,” said White. “Each data point requires analysis to ensure it’s captured and normalized to the SEC’s requirements.”
In addition, each hedge fund manager will have varying in-house technology or external data sources. Some may have multiple fund administrators or separately managed accounts, which only adds to the challenge.
Viteos has addressed each component of what is required for a complete Form PF solution, said White.
The Viteos Consulting practice engages to perform the initial and most critical step, gap analysis. This enables a firm understand data sources and format for each data point. It includes an analysis of the fund manager’s in-house technology, and what can be leveraged to simplify the process.
Viteos has also invested significantly to build a “parameterized aggregation engine” that controls all workflows and integration, with a flexible, rules-based system that is customizable by each client. Viteos has also created the workflow for final client review prior to filing, complete with audit trail.
Viteos provides middle office, consulting and fund administration services to alternative asset managers, more specifically hedge funds.
Viteos assists clients in all aspects of post-trade operations and accounting on an outsourced basis, even without being the fund administrator of record, said White.
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