IMS Consulting, a UK-based independent financial services regulation and compliance consultancy, has launched a new verification service to help hedge funds understand and meet the Hedge F
IMS Consulting, a UK-based independent financial services regulation and compliance consultancy, has launched a new verification service to help hedge funds understand and meet the Hedge Fund Standards Board standards of best practice.
IMS says the service has been launched at a time of increased scrutiny for hedge funds and an industry drive for transparency, with many investor groups now strictly monitoring manager adherence to these standards.
The board was established to continue the work begun by the Hedge Fund Working Group, bringing together 14 of the largest UK hedge fund managers, which published a report on best practice standards in January. Ten more hedge fund managers recently signed up to the 75 standards, which cover areas such as risk and performance management, valuation and counterparty disclosure.
The Hedge Fund Standards Board recently told the investor community that they should expect non-signatories to be the exception in future, and IMS says an increasing number of managers are now looking at conformity with the standards as a critical part of their appeal to new and existing investors.
With disclosure the focus of the initiative, managers conform to the standards by either complying fully or explaining why they do not. IMS works with firms to explain the practical implications of meeting the standards and demonstrate how to prove they adhere to them. The firm also assists clients in putting in place any extra controls necessary to ensure compliance.
‘Hedge fund managers now see conformity with standards as essential rather than optional,’ says Chris Rexworthy, director of risk consulting at IMS. ‘This fast, focused verification service assists firms with a proven, practical approach to compliance and risk management.
‘It enables firms to identify and understand the standards, and therefore demonstrate the high level of responsibility hedge funds display at a time when managers are increasingly in the spotlight. Our verification service makes the decision as to whether to comply or explain much easier. We also ensure our clients have quantified risks in line with internal capital adequacy requirements.’
IMS has 13 years of experience working in and with the alternative asset management industry. Rexworthy spent the past 10 years with the Financial Services Authority, and until recently was responsible for the supervision of around 2,000 wholesale investment firms, including wholesale brokers and hedge fund managers.
