Progress report
An assessment of hedge fund YTD performance in the face of renewed fears for a potential eurozone crash Read More
14/06/2011
Comment: Julian Korek
As an open economy focused on international financial services, Ireland suffered like many other countries during the credit crisis. While the funds industry enjoyed a strong regulatory reputation, the general financial services industry lacked adequate supervision leading to increasingly risky business activities by financial institutions.
The regulator in Ireland, the Central Bank of Ireland, is now addressing the misjudgements of the past and has created a new regulatory structure similar to that found in the UK. This new regime mirrors the FSA most particularly in its new enforcement directorate, which has been established with wide-ranging powers. The directorate is headed by Peter Oakes, whose previous experience includes spells in the enforcement department of the FSA and the Australian Securities commission. He has high-level support from the former FSA deputy governor, Matthew Elderfield, now head of financial regulation at the Central Bank.
In December of last year, the Central Bank issued an enforcement strategy to ensure proper regulation of the financial services sector. The document sets out a very clear purpose: the Central Bank will not allow financial institutions to take unnecessary risks or ignore their responsibility to comply with regulations. Anyone caught short of the new, stricter regulatory structure will find themselves investigated by the enforcement directorate. The Central Bank is keen to show that the Irish financial services industry is robust and fit for purpose following the recent turmoil caused by the credit crisis.
The Central Bank has not ignored the need to step up scrutiny of firms’ compliance arrangements, which deal with anti-money laundering (AML) and countering terrorist funding (CTF) measures. There is concern that a poor assessment by external auditors and compliance teams would have adverse consequences on the attractiveness of Ireland as a credible financial services centre. The tough measures set out in the enforcement strategy are designed to create the impression that Ireland will not tolerate financial crime and any firm that does not treat compliance arrangements with the time and consideration required will be held to account.
There is no escaping the fact that the new regulatory regime will impact UK hedge fund managers as well, and those with an Irish administrator need to be aware of the changes. Irish service providers will inevitably have to alter some of their processes, a notion reinforced by a warning given by Peter Oakes at an industry conference hosted by Kinetic Partners in Dublin in May.
Oakes expressed concern that the industry needs to improve its procedures and that service-level agreements will have to be dusted off and reviewed. UK managers should be prepared for discussions on what they expect from their administrator, and what they are actually paying for. It seems that Ireland wants no stone left unturned in this shake-up of its financial industry.
One additional point to note is that Ireland’s attempt to improve its image in terms of regulation, transparency and enforcement will be boosted by the introduction of Ucits IV and the efficiencies it can bring for cross-border distribution and consolidation of management companies. The widespread implementation of regulated Ucits structures, teamed with tighter supervision from the Central Bank, can only serve to make Ireland more attractive to investors too.
Recently, there has been speculation that although Ireland’s financial industry has suffered more than other jurisdictions in the short term, it could benefit in the long term. Ireland has
been forced to address a number of issues, improve processes and procedures and commit to greater transparency and improved enforcement, all of which contribute to the desired image of Ireland as a
credible and competitive financial centre.
Julian Korek is a founding member at Kinetic Partners
- Share
-
Text Size
Decrease text size
Increase text size
60 seconds with... Kenneth Turchin
CAN YOU DESCRIBE YOUR CURRENT ROLE?
I have worked in public accounting and hedge funds and in the past eight years have been selling middle- and back-office services to the alternate investment industry. My role is to build relationships with clients, teach them about SS&C’s products and services, and ensure seamless transactions every time the firm launches a new fund.
IF YOU WERE DOWN TO YOUR LAST £1,000, HOW WOULD YOU INVEST IT?
I would buy THREE shares in Apple and hope for a repeat 383% return in the next five years.
WHAT WOULD YOU DO IF YOU WERE IN PRESIDENT OBAMA’S SHOES?
That’s one pair of size 12 shoes I do not want to be in!
WHO WOULD PLAY YOU IF THEY MADE A MOVIE ABOUT YOUR FIRM?
Kevin Bacon. He is a versatile actor and the centre of the entertainment universe. I am in sales. Everyone in the industry would be linked to me in six steps or less. My client list would be ridiculous.
SS&C wins Form PF mandate from $23bn Lone Pine
SS&C Technologies, the hedge fund administrator, has been mandated by $22.7bn Lone Pine Capital to provide its Form PF reporting solution, HFMWeek has learned.
Squeeze on fees continuing, according to State Street
Downward pressure on fees for hedge fund services such as administration, alongside an increased demand for more transparency on pricing, continues to be a defining industry characteristic, State Street executives said today.
OPERS hires COMAC for $120m as part of $3bn hedge fund spend
The Ohio Public Employees Retirement System (OPERS) has committed $120m to COMAC Global Macro Fund and plans to hire new funds during the second and third quarters as part of its effort to commit around $3bn in fresh capital to the space by the end of the year, HFMWeek can reveal.
Investor demand for CTAs is on the rise, says Agecroft Partners
Agecroft Partners is seeing widespread demand from institutional investors for Commodity Trading Advisors (CTAs), which is a dramatic change from the historical reluctance of many institutional investors and their consultants to allocate to this strategy.
Read More07/06/2012
UK: Impact of the AIFMD - the real story
Join us and our panel of experts for HFMWeek's Subscribers' Club June's UK breakfast briefing, 'Impact…
31/05/2012
US: Family Offices
The next US HFMWeek Subscribers' Club breakfast, will take place on Thursday May 31. Join us and…
02/02/2011
European Hedge Fund Services Awards 2012
HFMWeek's European Hedge Fund Services Awards are designed to recognise companies that have outperformed...
Be the first to comment on this article!