New Managers April 2012

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Omgeo: Hedge funds need to think like traditional asset managers

Matt Nelson

Matt Nelson, Executive Director of Strategy at Omgeo LLC, a financial operations expert, warned in an article in March that the global regulations, including Dodd-Frank in the US, and EMIR (European Market Infrastructure Regulation) and the AIFMD in Europe, would have a profound and widereaching impact on hedge funds and the unintended consequences on this industry may be severe.

He cited a sizeable hedge fund firm, which had recently decided to return their investors' money. Among their reasons for doing this were the daily challenges of dealing with global regulations, demanding clients and difficult markets. Nelson expects more firms to exit. He also expects some to move to more lenient countries to avoid the stricter regulatory regimes of the US and the EU.

"There's also the possibility that more hedge funds will look to outsource their operations to specialty fund administrators, custodian banks or prime brokers," he added. "But many firms, particularly those focused on growing and expanding their business, will invest internally in operations and technology and will be looking across the trade lifecycle for opportunities to automate and increase efficiency."

Omgeo provide solutions to investment services firms including hedge funds, traditional long-only managers, brokers and custodians. Those services essentially connect market participants and allow them to automate their post-trade processing - which includes the events that occur between the ex......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.