Solutions
By Matt Mulry (pictured), Dillon Eustace – In the shadow of an impending review by the Financial Acting Task Force the Cayman Islands has undertaken an overhaul of its laws, regulations and guidance notes which govern its anti-money laundering and counter-terrorist financing regime.
The Taiwan Futures Exchange (TAIFEX) has launched two new FX futures contracts – GBP/USD Futures and AUD/USD Futures.
The addition of the two new futures contracts is the next step in TAIFEX’ strategy to rapidly expand its FX product line, which it began building in 2015 with the introduction of RMB FX Futures, followed by the introduction of RMB FX Options, EUR/USD Futures and USD/JPY Futures in 2016.
Dr Len-Yu Liu, Chairman of TAIFEX, says: “With Taiwan being one of the world’s most trade-connected economies, it is essential that TAIFEX continues to provide local investors and exporters, as well
Northfield Information Services has launched a new way for financial professionals, including hedge fund managers, to quantify risk based on the latest news.
Risk Systems That Read is a new service designed to augment Northfield’s current risk models, already trusted by more than 300 asset manager and asset owner clients globally.
Unlike traditional risk models that rely only on statistical data from the past, models augmented by Risk Systems That Read quantify risk based on analysis of the same news text that investors are receiving now. Investment professionals get a more complete and accurate understanding of risk in financial
Being a fully automated online electronic brokerage firm, Interactive Brokers has found itself in an enviable position of adapting to new regulations such as MiFID II relatively seamlessly. As it already had a lot of the IT technology in place to demonstrate best execution, IB has not needed to go through a significant overhaul nor, importantly, has it needed to hire a lot of extra staff, thereby increasing its fixed costs.
One example of the technology IB uses which will help clients under MiFID II is IB SmartRoutingSM technology; essentially an algorithm that scours the markets to ensure that best
Interview with James Alexander, Commercial Officer at Invast Global
How is bank regulation helping Invast Global win market share from traditional prime brokerages?
There is no doubt that the suite of bank focused regulations has been a tailwind for Invast. Of the regulations currently curtailing banking activities in Prime Broking, Basel II has been the greatest catalyst for the shift in appetite to onboard various client types, especially smaller or emerging managers and brokerages looking to distribute products to a broad retail audience.
MiFID / MiFIR are also having an impact, generally favouring the boutique organisations who can respond rapidly
Hedge fund managers are putting their prime brokers under continued pressure to be more transparent and open with respect to how they set their revenue targets and how they determine their costs for stock lending, commission rates, and margin finance.
For the last two decades, the PB operating model has been rather opaque, with very little consistency over how one bank prices its services versus another. It worked perfectly well but as new regulation such as MiFID II in Europe requires fund managers to demonstrate they are delivering best execution for their investors, PBs are having to respond accordingly. This
One of the clearest manifestations of technology innovation is the way in which it is enhancing transparency in all aspects of the investment funds industry, from front-office portfolio analytics and trading cost analysis, middle-office investor reporting, to back-office compliance and accounting.
This is also benefiting prime brokers as they look to better service their clients and develop more trusted partnerships. One bank that is working hard to drive the transparency agenda is Societe Generale Prime Services.
“What we have discovered is the more transparent you are, the more things you put on the table at the outset, the better the
Starting up a hedge fund is a challenging endeavour. Hiring staff, implementing all the necessary risk controls and regulations as well as running the organisation profitably, is far from easy. Many new hedge funds fail every year. However, starting a successful new hedge fund is still possible if one takes a pragmatic approach by outsourcing as many of the operational parameters as possible, including trading and execution.
“We have the infrastructure in place, which is a big benefit to any new hedge fund manager and effectively offer a hedge fund hotel-type model,” comments Jerry Lees (pictured), Chairman of Linear Investments.
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Increasingly, boutique prime brokers are gaining favour among both emerging and established hedge fund managers as they seek to develop higher-touch, more meaningful relationships. This is understandable against a backdrop of uncertainty in recent years, with bank-owned primes culling non-profitable hedge funds as they deal with the pressure of managing their balance sheets more effectively under Basel III.
At the end of the day, hedge funds want the stability of long-term PB relationships; something that GPP, a London-based boutique prime, has been more than willing to offer.
“The allure of the boutique prime broker is that we provide access to
In the current market environment, hedge fund allocators face a bit of a Catch 22. With markets continuing to move north – the S&P 500 was up 19.8% during 2017 (as of 28 December) – there is a strong argument to invest in long-only passive products. Even if investors, worried about a market correction, increase their exposure to hedge funds, how do they determine the extent to which a manager’s performance is alpha-driven as opposed to beta-driven?
“We did some research that looked into this a number of months ago, which at that time suggested that in the aggregate, fund performance
