Hedge funds addressing new regulatory hurdles, says Deutsche Bank study
Hedge funds are adopting a wait-and-see approach to compliance with regulation due to the complexity of workload involved, according to a study by Deutsche Bank.
Legal, compliance and regulatory matters now rank as the top contributor to their non-investment workload.
Deutsche Bank’s Hedge Fund Consulting Group’s survey of European and US hedge fund managers shows almost a quarter of US hedge fund COOs have seen an increase of up to 75 per cent in the amount of time they dedicate to such issues.
At the same time, hedge funds are taking a wait-and-see approach to compliance with the Alternative Investment Fund Manager Directive (AIFMD), with 82 per cent of European managers intending to delay registration until 2014.
Marketing to European investors continues with 35 per cent of European and 43 per cent of US managers choosing to utilise transitional marketing provisions.
The amount of time COOs globally dedicate to legal, compliance and regulatory matters has increased significantly - by up to 50 per cent - over the past two years for the majority of managers surveyed.
The majority of managers globally estimate their non-headcount related costs have increased by up to 25 per cent over the last two years.
More than 40 per cent of managers have hired more than one non-investment full-time employee to help prepare for and manage new regulatory requirements.
Thirty nine per cent of managers are uncertain whether AIFMD will bring additional investment from institutional investors.
Daniel Caplan, European head of global prime finance at Deutsche Bank, says: “The crucial role played by hedge fund COOs has been brought into sharp focus as the regulatory workload continues to mount, and this report provides a valuable insight into how this function has evolved to meet today’s increasingly complex demands.”
The survey polled 44 European and US hedge fund managers representing over USD325bn in assets under management.
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