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From Kirsten Bischoff, Opalesque New York:
As it becomes clear the extent to which the hedge fund industry will be regulated, the focus for firms has become how to plan for cost efficiency in technology, an area where many have recently cut budgets. But even as regulation aimed at hedge funds forces firms to invest in technology, so does legislation with a wider aim.
"The "best practices" reports issued by the President's Working Group on Financial Markets as well as other reports and pronouncements from regulators have emphasized that hedge fund managers focus on risk management generally, and so I do think more people are thinking about outsourcing the technology," says Rich Goldman, who represents hedge funds in a broad array of issues as a Partner at law firm Bingham McCutchen. He also points out that the costs associated with the need to outsource technology are a large part of the decision making process, especially for funds whose technology budgets are not as robust as they used to be.
According to London-based Kinetic Partners, proposed European Union regulations have been estimated to potentially cost the UK hedge fund industry alone $3bln to implement the infrastructure changes required. While US hedge fund regulation is expected to cover less ground, investor demand for transparency is expected to fill in many gaps and managers are likely to find themselves re-evaluating 2009 budg...................... To view our full article Click here
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