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More players adopt SBAI's Due Diligence Questionnaire for Alternative Risk Premia Products

Wednesday, December 16, 2020
Opalesque Industry Update - The Standards Board for Alternative Investments (SBAI) announced that major broker-dealers support the adoption of the SBAI Alternative Risk Premia DDQ for Broker-Dealer Products. The DDQ assists institutional investors and investment managers in their due diligence of broker-dealers through a standardised set of questions.

The firms who support the SBAI Alternative Risk Premia DDQ for Broker-Dealer Products include:

· Barclays

· BNP Paribas

· CIBC

· Citi

· Goldman Sachs

· JP Morgan

· Macquarie Group

· Morgan Stanley

· UBS

The SBAI's Alternative Risk Premia Working Group developed the DDQ with the aim of promoting both transparency and a way to compare consistently broker-dealer products. Input was also sought from the broker-dealer community in recognition that the sell side has a role in delivering these aims.

Matt Talbert, Director at Teacher Retirement System of Texas and a member of the Working Group said: "The SBAI Alternative Risk Premia DDQ for Broker-Dealers provides a powerful tool that will help institutional investors scrutinise broker-dealer products, enabling them to make better informed investment decisions."

The SBAI Alternative Risk Premia DDQ includes 70 questions covering a range of topics, including the broker-dealers' research and development capabilities, governance, operational aspects, trading set-up, team set-up, investment process, index design and cost analysis.

Sean Flanagan, Global Co-Head of Quantitative Investment Strategies at Morgan Stanley, said: "We welcome the publication of the SBAI Alternative Risk Premia DDQ for Broker-Dealers. A wide adoption of the DDQ could help the due-diligence process become more efficient, giving investors a better platform to make comparisons between offerings at different providers and for broker-dealers to demonstrate their control environment to potential clients."

Michele Cancelli, Global Head of QIS Trading and Structuring at Citi, said: "Investing in systematic Alternative Risk Premia products requires dedicated due diligence of the broker-dealer's research and development, index design, strategy implementation and governance processes. This DDQ provides a detailed set of questions enabling investors to conduct a thorough assessment of a broker-dealer's platform and simplify like-for-like comparison of products across providers."

Thomas Deinet, Executive Director of the SBAI, said: "The SBAI Alternative Risk Premia DDQ for Broker- Dealers is yet another example of how the SBAI supports the creation of frameworks of transparency, good governance and integrity, facilitating investor due diligence and thereby simplifying the investment process. The SBAI is delighted with the support of the DDQ by the broker-dealer community and encourages investors to use it."

The SBAI Alternative Risk Premia DDQ for Broker-Dealer Products is a supplement to two previously published memos on Alternative Risk Premia in July 2020. It forms part of the SBAI Toolbox, which provides guidance to institutional investors, managers and other industry participants on a broad range of topics, including addressing conflicts of interest, risk and fee transparency, cyber security, etc.

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