The need for treasury and liquidity solutions is rising to the top of hedge fund and private equity managers’ agenda as pressures increase to strengthen risk management processes. Jonathan Spirgel (pictured), Managing Director of Cash & Liquidity (Public Markets), Hazeltree, provides further detail…
The need for treasury and liquidity solutions is rising to the top of hedge fund and private equity managers’ agenda as pressures increase to strengthen risk management processes. Jonathan Spirgel (pictured), Managing Director of Cash & Liquidity (Public Markets), Hazeltree, provides further detail…
What are some of the biggest challenges your firm is facing in the current environment, and how are you overcoming them?
Public markets are facing a mix of challenges, from inflation and the resulting interest rate increases to stiffer regulatory oversight and disruptions in the banking industry. The heightened need to employ robust risk management practices has taken on greater meaning. As a result, Hazeltree is seeing demand for its treasury and liquidity solutions from the alternative asset industry. To meet this need, the company has expanded its team by 15% and filled out its C-suite. Over the last year, Hazeltree appointed new leaders to the roles of chief executive officer, chief revenue officer, chief people officer, chief financial officer, chief technology officer and chief product officer.
What opportunities do you see emerging in the industry in the near future, and how are you positioning your firm to take advantage of these opportunities?
Disruption in the banking industry has put a renewed focus on liquidity and risk management in the hedge fund space. The Hazeltree team has been working closely with its clients to show them how they can use its platform to get a full picture of their collateral requirements and to monitor counterparty health.
The team continues to innovate the Hazeltree platform to support evolving market and customer needs, such as uncleared margin rules, debt management, money market sweeps, and securities finance data. To improve users’ experience, Hazeltree recently enhanced navigation features and updated alerts and consolidated screens for users to seamlessly engage with the platform.
What is your view on the current regulatory environment for hedge funds, and how are you ensuring compliance?
Hazeltree works closely with hedge fund clients to aid them in their path to regulatory compliance. Now that the initial 6 phases of the Uncleared Margin Rules (UMR) have been completed, hedge funds need to evaluate their UMR processes and ensure they are compliant with regulations. Funds with an Average Aggregate Notional Amount (AANA) of over $8 billion and surpassing the $50 million Initial Margin (IM) threshold are now expected to post the requisite collateral immediately, without any grace period.
All firms should determine the “how” and the “who” of maintaining documentation templates for Reg IM legal agreements with each counterparty and custodian, and ensure they remain in sync with new ISDA documentation. Hedge funds who are not yet in scope should actively monitor AANA and continue tracking it over time as well as begin to document any items that are needed once in scope.
Hazeltree is helping hedge fund clients comply with UMR requirements using the Hazeltree Collateral Manager platform. With this solution, firms can monitor counterparties, mitigate risk and optimize capital usage across their uncleared OTC and bilateral repo transactions, while optimising usage of liquidity.
Separately, Hazeltree is focused on the potential changes to the Money Market Fund products in light of the Money Market liquidity stresses in March 2020, and the banking turmoil in March 2023.
With the increased focus on diversity and inclusion in the financial industry, what steps are you taking to ensure your firm is a diverse and inclusive workplace?
Hazeltree is committed to creating a place of belonging to empower its employees to do their best work. We have taken many steps to promote diversity and inclusion across the firm. For example, we provide training and mentorship programs to support the career growth of all employees. We also prioritize equal pay through analysis of compensation practices to ensure equity in employee pay rates. We also implemented community outreach programs designed to recruit a diverse workforce.
How are hedge funds managing liquidity risk, and what steps are they taking to ensure they can meet redemption requests?
Recent events have shined a spotlight on the importance of effectively managing liquidity risk. Leveraging technology, hedge funds are better positioned to improve returns by gaining greater control over collateral management processes, unlocking hidden value and managing operational risk.
Hazeltree provides these advantages with advanced analytics and rules-based suggested actions, allowing hedge funds to execute optimal movements to collapse unintended debits, free up cash, and quickly move cash via a variety of transactions, including cash wire, FX and money markets.
Jonathan Spirgel, Managing Director of Cash & Liquidity (Public Markets), Hazeltree – Jonathan joined Hazeltree on 20 October, 2020, as managing director of cash and liquidity management and leads our product management team for our public markets segment which includes Hedge Funds, Traditional Asset Management, and Insurance Companies. Spirgel spent over 32 years at BNY Mellon, where he was an Executive Vice President and lead and grew a number of businesses. He led the Depositary Receipts product management group where he developed new and innovative products such as the BLDRS exchange-traded funds, as well as the patented technology that drives the gold and silver exchange-traded funds.
