A majority of hedge fund managers and investors have legacy risk and compliance systems that did not help them prevent losses during the turbulent markets of August 2011, an industry survey has found.
The Thomson Reuters survey on the impact of managing risk and compliance in response to new regulations was carried out during during a forum held by the technology company in New York in September. It polled over 90 members of the global and local buy-side trading community, including hedge funds, fund of funds, private equity firms, investment managers and other service providers, on the need for hedge fund managers to establish institutional quality compliance programs to attract investors.
The hedge fund industry is coming under increased regulatory scrutiny across the globe and controlling risk has become increasingly important for investors and managers. The results of our poll however, confirm that a number of hedge funds are still locked into legacy technology that lacks the agility to adequately respond to changing business and regulatory drivers. Thomson Reuters is working to bring solutions to market that provide our clients with all of the tools they need to scale their operations and navigate the shifting regulatory landscape, said Gerry Buggy, global head of Enterprise Content, Thomson Reuters.
Other key findings of the poll include:- 93% of respondents did not think the Dodd-Frank Wall Street Reform and Consumer Protection Act would prevent another financial crisis.
– With 10 representing very effective, the effectiveness of three specific parts of Dodd-Frank regulation were analyzed by respondents as follows: The requirement that states hedge funds with $150 million or more in assets should register with the SEC received only 4.5 out of 10; the effectiveness of increased authority and oversight of the derivatives market received 4.4 out of 10; the establishment of the Financial Stability and Oversight Council scored only 3.8 out of 10
(JDC)