Hedge Funds Ramp Up Reporting11.30.2011
Technology facilitates regulatory compliance and investor transparency.
Faced with mounting regulatory and investor pressures, hedge funds are deploying industrial-strengthen technology to collect, collate, and convey risk information.
Algorithmics, a provider of enterprise risk solutions, has launched its hedge fund reporting service, Algo Risk Reports, for the U.S. market, and has signed Optima Fund Management as a client in New York for UCITS reporting.
The European Securities and Markets Authority (ESMA), the pan-European securities regulator, has released a consultation on possible implementing measures for the Alternative Investment Fund Managers Directive (AIFMD).
Algo Risk Reports is designed to be a cost-effective risk service for hedge funds to meet regulatory reporting requirements such as UCITS IV, AIFMD and Dodd-Frank, as well as increasing demands from their investors for higher levels of risk transparency facilitated by the OPERA standards.
“We see demand for outsourced risk management driven by two factors: increased regulation and increased investor pressure for transparency and reassurance that risk is being managed properly,” Martin Botha, director of buy-side Solutions at Algorithmics, told Markets Media. “Increasingly hedge funds are being asked to demonstrate this as part of the due diligence process.”
Algo Risk Reports is a core component of Algorithmics’ solution for hedge funds, Portfolio Construction and Risk Management for Hedge Funds.
“This is Algorithmics’ solution for all hedge funds, irrespective of their strategy, level of sophistication or AUM, to address regulatory compliance, improve investor confidence and formulate investment decisions,” said Botha.
Portfolio Construction and Risk Management for Hedge Funds is a process of simulating a client’s asset portfolio through time and market scenarios and providing a number of analytics from this simulation to help them manage their funds in a risk efficient way, said Botha.
Its core components of the solution are accurate asset valuations, accurate modeling of the asset features through time and over scenarios coupled with the right and meaningful analytics and analysis to make the correct financial investment decisions.
A new protocol, Open Protocol Enabling Risk Aggregation (OPERA), will help hedge fund investors to aggregate exposures, and reduce proliferation of investor-specific risk formats that hedge funds have to manage.
Developed by an independent working group of 16 firms, including investors, prime brokers, fund administrators and hedge funds, OPERA is designed to increase the level of transparency available to investors, which varies from fund to fund and from strategy to strategy.
“OPERA will streamline risk reporting and introduce more consistency in data, calculation methodologies and reporting formats,” Botha said. “This will assist all parties but is particularly beneficial for asset owners.”
The Pyth network is designed to bring real-world data on-chain on a sub-second timescale.
Jefferies and three fund managers will provide CLO equity capital and warehouse funding for new issues.
Pyth is built on a blockchain to handle receipt and distribution of fast-moving data.
CEO said significant loss relating to the failure of a US-based hedge fund is unacceptable.
The fund will leverage the platform to aide its AI-based strategies for the currency markets.