Author: Tony Griffiths

Regulatory load mounts for European managers

Late last week in London, the current state of hedge fund industry regulation, with a notable focus on Europe, was ably summarised by panellists at The IMS Group Regulatory Forum. Delegates in attendance may have felt uncertain about developments upon arrival, but they likely left with more questions and concerns than when they arrived.

An update on the EU’s Alternative Investment Fund Managers Directive (AIFMD) from Aima’s head of asset management regulation, Anna Larris, gave a flavour of the general uncertainty and the ground left to cover.  
 
Working on the technical draft of the AIFMD, the European Commission appears to be again shunning consultation in favour of a clandestine approach. The resultant text “could be worse” than earlier drafts, Larris warned.  

It’s not just the AIFMD that warrants attention. The sequel to Mifid is on its way and the first draft is teeming with “scary” new concepts, said Sidley Austin’s Leonard Ng. High-frequency traders in particular, take note.

Pushed back until April, the EU’s short-selling regulation also requires an eye, as does its Markets Abuse Directive, on which Aima continues to lobby. Throw in the admittedly less-imposing derivatives legislation and the…

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Author: David Beattie

Editor's view: 1 February 2012

It’s well known that our industry likes to be viewed as on-trend, an early adopter, and generally ahead of the curve, but when it comes to emerging technologies the reality is that it sometimes lags behind other high-profile industries.

Ultimately, those leading the hedge fund charge have several fundamental concerns to address – not just from investors, but also increasingly from regulators – so a slower approach is perhaps prudent. However, complacency must not be allowed to breed, and not being abreast of latest guidance on technology and social media developments is likely to curry little favour with regulators.

While it is highly unlikely that any fund would launch a Facebook page or post pictures from an off-site on Twitter, the responsibility for controlling anything business-related on social media outlets lies with the managers, and offers scant wiggle room.

This month the SEC issued a detailed ‘alert’ covering responsibilities and offering guidance on the issue. Citing the rapid uptake of social media by the financial services industry, it ‘encourages’ firms to adopt, and regularly review, the effectiveness of its policies and procedures.

For many in the industry, social media in the…

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Author: William Keunen

Comment: William Keunen

My sense is that most industry participants do not regret the passing of 2011 and are looking forward to making a fresh start.

Overall the industry lost money and a higher number of funds than usual called it a day and wound down, even some that had only started earlier in the year.

Other than the notable out-performers, the main bright spot for the industry is that the investor community continues to see alternatives as a must-have piece of their allocation jigsaw; so capital flows have remained positive, especially from institutional sources.

Here are some thoughts on what can we expect in 2012:

A healthy flow of new blood in the form of fund launches; managers coming off proprietary trading desks and out of hedge funds. Of course, it takes longer to get going, the bar is higher and raising capital is certainly no bed of roses, but managers haven’t been deterred from going it alone.

Closer co-operation between managers, investors and service providers to raise awareness around the context of the industry. We all know this has always been an uphill battle but it is particularly encouraging to…

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Author: Will Wainewright

Greek tragedy offers more risks than returns

As the Greek government re-opened discussions last week with private sector lenders, who own around $260bn of Greece’s $440bn debt-pile, the mainstream press focused its crosshairs, not for the first time, on the hedge fund sector.

Speculative reports blamed “greedy” hedge fund negotiators for blocking a deal on a Greek debt write-down, with $28bn Och-Ziff Capital Management and $14bn York Capital Management among those named. But were hedge funds to blame?

It is worth remembering that much of the privately owned Greek debt is held by European banks, with France particularly exposed. On top of that, industry sources told HFMWeek that most hedge funds are wary of getting involved in such a politically volatile situation. That appeared to be backed up by Och-Ziff and York, both of whom subsequently denied any involvement in the negotiations, saying their debt holdings were not of any “material” size.

An investment source at a $3bn fund of hedge funds said: “A lot of our hedge funds are terrified. They are unwilling to touch something where the outcome is so unpredictable, and the situation is so politically sensitive.” Some think most funds are waiting for a deal to…

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