07/07/2010 Author: Gwyn Roberts

Counterparty risk still a talking point

Operational risk remains at the forefront of managers’ minds, according to the speakers at an HFMWeek Subscribers’ Club UK breakfast briefing held earlier this month.

Following a challenging period, and renewed uncertainty within the financial markets, hedge funds are still closely monitoring levels of counterparty risk, as well as developing new procedures for emerging products like hedge fund-style Ucits III funds.

Three speakers – Malcolm Goddard, COO of Altima Partners; Hitesh Bharkhada, COO of Culross; and Tom Zdon, vice president of the event’s sponsor Advent – representing the views of hedge funds, investors and service providers, spoke to a packed audience on the subject of operational due diligence, telling listeners that the majority of investors were no longer content to conduct a box-ticking exercise, but were “lifting the lid on hedge funds.”  

According to Zdon, increased counterparty concerns and investor demands are forcing firms to “manage documents more efficiently,” while the current focus on the  AIFM Directive is “requiring funds to beef-up internal documentation practices.”