What keeps fund administrators up at night? According to a survey by Confluence, data integrity remains a nightmare for hedge fund administrators.
The rescue of Bear Stearns, followed by the collapse of Lehman Brothers, made it immensely difficult for hedge fund managers to access financing, but perhaps more importantly, it obliged them to respond to investor concerns about counter-party credit risk and the safety of assets in custody.
It is not surprising therefore that according to a survey of 130 executives at the Association of the Luxembourg Financial Industrys (ALFI) Spring Conference, the demand from investors to increase transparency and reporting requirements has led to increased pressure on data management.
According to Kirk Botula, executive vice president and COO of Confluence: Widespread use of manual processes and spreadsheets increases the potential for errors occurring, and brings a heightened urgency to putting automation safeguards in place.
The Global Custodian 2009 Hedge Fund Administration Survey also saw increased pressure on hedge fund administrators to deliver more and more up to date information about positions, portfolios and performance.
The Confluence study discovered that manual processes continued to worry fund administrators, a problem that continues to plague most parts of the financial services industry, even in 2010.
As a result, nearly 60% of respondents want to replace their manual processes with automated technology in the next 12-24 months.
The regulatory environment is constantly changing and increasing in complexity, said Botula. In that context, consolidating investment data is becoming a best practice.