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From Sagar Chakraverty, Opalesque Asia:
Regulators are demanding greater portfolio transparency, signaling a more aggressive approach to hedge fund oversight, but this could cost hedge funds dearly, according to concerns raised by managers at the Global Hedge Fund Forum 2009 hosted by Indus Valley Partners, a technology consultancy firm.
Increased regulation and investor scrutiny would drive up demands on better technology and better operational risk management, regardless of fund size or strategy. Frequent reporting cycles need additional investments in data warehousing technology and in data management. The increased cost of technology alone may lead to industry consolidations, and higher compliance-costs will hurt smaller firms more who usually look to 3rd parties to meet any increased operational burdens.
Need for multi-prime brokers
In addition to transparency, the prime broker counterparty risk is a very important issue for both large and small funds. Many firms with single prime brokers felt an urgent need to shift to the next level - multiple prime brokered firm.
"The emerging business model will be a multiple-prime-brokerage business model, which diversifies support, margining and securities lending activities among several providers," said Brad Hintz, a Sanford Bernstein analyst, which is an American financial research firm.
This multi-prime ...................... To view our full article Click here
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