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WASHINGTON - In the 2007-2008 financial crisis, financial distress at certain nonbank financial companies contributed to a broad seizing up of financial markets. These nonbank financial companies were not subject to the type of regulation and consolidated supervision applied to bank holding companies, nor were there mechanisms in place to resolve the largest and most interconnected of these nonbank financial companies without causing further instability.
To address potential risks posed to U.S. financial stability by these companies, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) authorizes the Council to determine that certain nonbank financial companies will be subject to supervision by the Board of Governors of the Federal Reserve System (the Board of Governors) and to enhanced prudential standards. This authority is one of the Council’s important tools to carry out its statutory duty to identify risks to financial stability and respond to emerging threats. The Council acts as a collaborative body, chaired by the Secretary of the Treasury, that brings together the expertise of the federal financial regulators, an insurance expert appointed by the President, and state regulators.
Although the Dodd-Frank Act specifically outlines the substantive considerations and procedural requirements for designating nonbank financial companies, the Council determined that a rulemaking would provide increased transparency and guidance that would be beneficial. The Council went to great lengths in its rulemaking to foster additional transparency and to obtain input from all interested parties. The Council issued an advance notice of proposed rulemaking in October 2010 and a first notice of proposed rulemaking (the First NPR) in January 2011 providing guidance on the statutory criteria and specifying the procedures that the Council will follow in assessing nonbank financial companies for designation. The Council elected to issue a second notice of proposed rulemaking (the Second NPR) in October 2011 to provide additional details regarding the framework for assessing nonbank financial companies and to offer further opportunity for public comment on the Council’s proposed approach. After receiving significant input from market participants, non-profits, academics, and other members of the public, the Council’s members worked in close collaboration to develop a final rule. The final rule, issued in April 2012, describes an analytic framework for designations that provides a consistent approach to determinations that incorporates both quantitative analyses and qualitative judgments.
Council members are also working closely with their international counterparts on the process for identifying global systemically important financial institutions. Treasury and U.S. regulators are active participants in the G-20 and Financial Stability Board (FSB). G-20 Leaders, at the Seoul Summit in November 2010, endorsed a policy framework developed by the FSB to address the moral hazard posed by systemically important financial institutions. Most recently, at the Cannes Summit in November 2011, G-20 Leaders requested extension of this policy framework beyond global systemically important banks to nonbanks of global systemic importance. Council members are continuing to cooperate with their international partners to ensure consistency across frameworks and the development of international standards of the highest quality. For example, the International Association of Insurance Supervisors (IAIS) is working, in cooperation with the FSB, to extend the FSB’s policy framework to the insurance sector, and is developing criteria and a methodology for identifying global systemically important insurers (G-SIIs). The Federal Insurance Office (FIO) of the Treasury Department, whose director is also a member of the Council and a member of the IAIS and the IAIS Executive Committee, is pursuing an international consensus that aligns the IAIS criteria, methodology, and timing with the final rule issued by the Council. At the same time, the Council’s designations under the Dodd-Frank Act are an important part of the U.S. financial reform process, and the Council will continue to move forward in implementing its framework in a timely manner.
Process for Determinations
The Council has developed a robust process for evaluating whether a nonbank financial company should be subject to Board of Governors supervision and to enhanced prudential standards. The Council will approach each determination using a consistent framework, but ultimately each designation must be made on a company-specific basis, considering the unique risks to U.S. financial stability that each nonbank financial company may pose.
The Dodd-Frank Act requires the Council to assess ten considerations when evaluating nonbank financial companies, as well as any other risk-related factors that the Council deems appropriate. The Council has grouped these ten statutory considerations into a six-category framework for its analysis. Three of these six categories seek to assess the potential impact of a company’s financial distress on the broader economy: size, interconnectedness, and substitutability. The remaining three categories seek to assess the vulnerability of a nonbank financial company to financial distress: leverage, liquidity risk and maturity mismatch, and existing regulatory scrutiny. An assessment of all six categories will encompass all ten of the statutory considerations.
The Council’s interpretive guidance issued with its final rule explains the three-stage process that the Council generally intends to use in assessing nonbank financial companies:
Stage 1: First, the Council will apply uniform quantitative thresholds to identify those nonbank financial companies that will be subject to further evaluation.
Stage 2: The Council will analyze the nonbank financial companies identified in Stage 1 using a broad range of information available to the Council primarily through existing public and regulatory sources.
Stage 3: The Council will contact each nonbank financial company that the Council believes merits further review to collect information directly from the company that was not available in the prior stages. Each nonbank financial company that is reviewed in Stage 3 will be notified that it is under consideration and be provided an opportunity to submit written materials related to the Council’s consideration of the company for a proposed determination.
If the Council approves a proposed determination, the nonbank financial company will receive a written explanation of the basis of the proposed determination. The company may then request a hearing to contest the proposed determination. After any hearing, a final determination requires a second vote of the Council.
Stage 1 Analysis
Much attention has been focused on the Stage 1 thresholds. Stage 1 is not intended to identify nonbank financial companies for a final determination. Instead, the Council developed the uniform quantitative thresholds in Stage 1 as a tool that the Council, nonbank financial companies, market participants, and other members of the public may use to assess whether a nonbank financial company will be subject to further evaluation by the Council. As noted in the final rulemaking, based on data currently available to the Council through existing public and regulatory sources, the Council has estimated that fewer than 50 nonbank financial companies meet the Stage 1 thresholds. The Council recognizes, however, that the Stage 1 thresholds may not capture all types of nonbank financial companies and all of the potential ways in which a nonbank financial company could pose a threat to financial stability. Therefore, the Council reserves the right to subject any nonbank financial company to further review if the Council believes that further analysis of the company is warranted to determine if the company could pose a threat to U.S. financial stability, regardless of whether such company meets the thresholds in Stage 1.
A nonbank financial company will be subject to further evaluation beyond Stage 1 if it has at least $50 billion in total consolidated assets and meets or exceeds any one of the following Stage 1 thresholds:
$30 billion in gross notional credit default swaps outstanding for which the nonbank financial company is the reference entity;
$3.5 billion in derivative liabilities;
$20 billion of total debt outstanding;
15 to 1 leverage ratio, as measured by total consolidated assets to total equity; or
10 percent ratio of short-term debt (having a maturity of less than 12 months) to total consolidated assets.
The Stage 1 thresholds and their levels reflect the collective judgment of the Council members, in light of the statutory standards and considerations and an extensive review of applicable data and various analyses. The Council selected the Stage 1 thresholds based on their applicability to nonbank financial companies that operate in diverse financial industries and because the data underlying these thresholds for a broad range of nonbank financial companies are generally available from existing public and regulatory sources. The Council reviewed distributions of various samples of nonbank financial companies and bank holding companies to inform its judgment regarding the appropriate thresholds and their quantitative levels. The Council also considered historical testing of the thresholds to assess whether they would have captured nonbank financial companies that encountered material financial distress during the financial crisis of 2007–2008.
For U.S. nonbank financial companies, the Council intends to apply each of the Stage 1 thresholds based on the global assets, liabilities, and operations of the company and its subsidiaries. For foreign nonbank financial companies, the Council intends to calculate the Stage 1 thresholds based solely on the U.S. assets, liabilities, and operations of the foreign nonbank financial company and its subsidiaries. These thresholds add significant transparency to the designation process, beyond the statutory requirements, by helping nonbank financial companies assess whether they are likely to be subject to additional review by the Council. In addition, the Council may develop additional guidance regarding potential metrics or thresholds, as appropriate, as more data and information about firms and industries, such as asset managers, hedge funds, private equity firms, and swaps entities, become available. Any additional guidance will be released to the public.
While the Board of Governors has not issued regulations under section 170 of the Dodd-Frank Act to exempt certain types or classes of nonbank financial companies from designation, the Stage 1 thresholds provide a significant level of transparency and certainty for the public regarding the nonbank financial companies that are most likely to be subject to evaluation for designation.
Stage 2 Analysis
In the second stage of the process, the Council will conduct a comprehensive analysis of each nonbank financial company identified in Stage 1. In contrast to the application of uniform quantitative thresholds to a broad group of nonbank financial companies in Stage 1, the Council intends to evaluate the risk profile and characteristics of each individual nonbank financial company in Stage 2 based on a wide range of quantitative and qualitative industry-specific and company-specific factors. The analysis will use the six-category analytic framework described above – size, interconnectedness, substitutability, leverage, liquidity risk and maturity mismatch, and existing regulatory scrutiny. To the extent data are available, the Council also intends in Stage 2 to consider the impact that resolving a failing nonbank financial company could have on U.S. financial stability.
In general, this analysis will be based on a broad range of information already available to the Council through existing public and regulatory sources, including information possessed by the company’s primary financial regulatory agency or home country supervisor, as appropriate, and any information voluntarily submitted by the company. The Council also intends to fulfill its statutory obligation to rely whenever possible on information available through the Office of Financial Research (the “OFR”), member agencies, or the nonbank financial company’s primary financial regulatory agencies before requesting the submission of information from any nonbank financial company in Stage 3.
Based on the Stage 2 analysis, the Council intends to contact those nonbank financial companies that the Council believes merit further evaluation in Stage 3.
Stage 3 Analysis
The Council will conduct a review of each nonbank financial company in Stage 3 using information collected directly from the nonbank financial company, as well as the information used in the first two stages. At the beginning of Stage 3, the Council will send a notice of consideration to each nonbank financial company that will be reviewed in Stage 3. Notified companies will be provided an opportunity to submit materials to the Council. This opportunity for the company to submit materials to contest the Council’s consideration of the company for a proposed determination is an additional protection, not statutorily required, that the Council provided in its final rule.
The notice of consideration likely will also include a request that the nonbank financial company provide information that the Council deems relevant to its evaluation. This information will generally be collected by the OFR. Before requiring the submission of reports from any nonbank financial company that is regulated by a Council member agency or any other primary financial regulatory agency, the Council will coordinate with such agencies and will, whenever possible, rely on information available from the OFR or from such agencies. The Council will also consult with appropriate foreign regulatory authorities, to the extent appropriate. Council members and their agencies and staffs will maintain the confidentiality of such information in accordance with applicable law.
In its analysis under the six-category framework, the Council will consider both quantitative and qualitative information. The Council expects that the information necessary to conduct an in-depth analysis of a particular nonbank financial company may vary significantly based on the nonbank financial company’s business and activities and the information already available to the Council from existing public sources and domestic or foreign regulatory authorities. Information relevant to the Council’s analysis may include confidential business information such as internal assessments, internal risk management procedures, funding details, counterparty exposure or position data, strategic plans, resolvability, potential acquisitions or dispositions, and other anticipated changes to the nonbank financial company’s business or structure that could affect the threat to U.S. financial stability posed by the nonbank financial company. The Council will also consider qualitative factors that include considerations that could mitigate or aggravate the potential of the nonbank financial company to pose a threat to U.S. financial stability, such as the nonbank financial company’s resolvability, the opacity of its operations, its complexity, and the extent and nature of its existing regulatory scrutiny.
The objective of the Stage 3 analysis is to assess whether a nonbank financial company meets one of the statutory standards for a determination: that is, whether the company’s material financial distress, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the company, could pose a threat to U.S. financial stability.
At the end of Stage 3, based on the results of the analyses conducted during each stage of review, the Council may, by a vote of at least two-thirds of the Council’s voting members then serving, including an affirmative vote by the Chairperson of the Council, make a proposed determination regarding the company. If a proposed determination is made, the Council will provide the nonbank financial company with a written explanation of the basis of the proposed determination. The company may request a hearing to contest the proposed determination. After any hearing, in order to make a final determination, the Council must again vote by a two-thirds majority of the Council’s voting members then serving, including an affirmative vote by the Chairperson. The Council will publicly announce all of its final determinations, as required by the Dodd-Frank Act. The Council is also required, by statute, annually to reevaluate currently effective determinations and rescind any determination if the Council determines that the nonbank financial company no longer meets the standards for determination.
Revisions to the Rule and Interpretive Guidance Based on Public Comment
In response to comments on the First NPR, the Council incorporated numerous additions and changes in the Second NPR. Most notably, the Council added extensive interpretive guidance that outlined the three-stage process described above, including the addition of the uniform, quantitative Stage 1 thresholds and sample metrics for each item in the six-category analytic framework. In response to requests from commenters, the Council also added definitions of the terms “threat to the financial stability of the United States” and “material financial distress” with respect to the statutory determination standards to the interpretive guidance, and added a confidentiality provision to the rule. In addition, the Second NPR included greater safeguards for nonbank financial companies under evaluation, including a requirement for a notice from the Council to companies upon completion of the Council’s evidentiary record in Stage 3, and a 180-day deadline for a proposed determination after that notice is sent; and greater clarity on the process for emergency waivers or modifications of the otherwise applicable procedural requirements.
In developing the final rule and guidance, the Council made a number of additional changes in response to comments on the Second NPR. The final rule provides greater clarity on the confidentiality provisions that will apply to information submitted voluntarily by nonbank financial companies and information that is collected from regulators that are not Council members. The final rule and guidance also include additional procedural steps to benefit nonbank financial companies and aid the Council’s analysis, including an intention to consult with primary financial regulatory agencies of a company’s significant subsidiaries in Stage 2, when appropriate; an intention to provide at least one business day’s notice to a firm before publicly announcing its designation following a final determination; and additional notice and opportunity for firms to submit information in annual reevaluations of designated companies. The final rule also provides greater clarity on a number of issues, including the definition of “company”; how the Council may consider managed funds and fund advisors; and several clarifications to the definitions, calculations, and processes for applying the Stage 1 thresholds.
Determinations
The Council will exercise its judgment as it considers both quantifiable metrics and the unique risks that a particular nonbank financial company may present to the financial system. This flexibility will allow the Council to address the diverse range of business models among nonbank financial companies. Moreover, given the dynamic nature of financial markets and the evolution of financial products and services, the Council will need the ability to take such changes into account in its determinations. Ultimately, in accordance with the Dodd-Frank Act, all designations will be based on a determination that a company’s material financial distress – or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the company – could pose a threat to U.S. financial stability.
Every designation decision will be firm-specific, and every firm will receive robust due process protections, including the opportunity for judicial review of any final designation. Even before the Council votes on a proposed designation, a company under consideration will have the opportunity to submit written materials to the Council addressing whether, in the company’s view, it meets the standard for designation. Only after Council members have reviewed that information will they vote on a proposed designation, which requires the support of two-thirds of the Council (including the affirmative vote of the Chairperson) and after which the Council will provide the company with a written explanation of the basis of the proposed designation. If challenged, the proposed designation is subject to review through a formal hearing process and another two-thirds Council vote. The Council must report to Congress annually on all final designations and the basis for such designations.
In the wake of the 2007-2008 financial crisis, Congress included in the Dodd-Frank Act the authority for the Council to designate nonbank financial companies that could pose a threat to U.S. financial stability. The designations process described in the Council’s rule and guidance is the result of over a year of dialogue with market participants, non-profits, academics, and members of the public. The resulting rule and guidance form an important part of the Council’s ability to carry out its statutory duties to identify risks to financial stability and respond to such threats in order to better protect the U.S. financial system.
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Dow Jones Indexes, a leading global index provider, today announced the expansion of the Dow Jones LSP Position Sizing Index family to include three new size-segment indexes:
– Dow Jones LSP Position Sizing U.S. Large-Cap 250 Index
– Dow Jones LSP Position Sizing U.S. Mid-Cap 250 Index
– Dow Jones LSP Position Sizing U.S. Small-Cap 250 Index
The Dow Jones LSP Position Sizing Indexes are quantitative-strategy gauges based on a proprietary quantitative algorithm created by the risk-management-research consulting firm LSP Partners LLC. The new
size-segment indexes supplement the Dow Jones LSP Position Sizing Equal Sector U.S. Large-Cap 50 Index, which launched in January.
Indexes in the Dow Jones LSP Position Sizing Index family take a dynamic approach to measuring stocks by allocating index-component weights between an equity segment and a cash segment represented by Treasury Bills. The allocation between the two segments is determined by a rules-based application of the Leverage Space Portfolio strategy, or LSP, which seeks to maximize the probability of positive performance, rather than seeking to maximize performance, by employing a risk-control process focused on drawdown management.
“The market volatility over the past several years seems to have increased market risk sensitivities,” said Michael A. Petronella, President, Dow Jones Indexes. “The indexes launched today are designed to offer the flexibility to track multiple segments of the U.S. market using tools that seek to dynamically account for stock-price fluctuations.”
The three new indexes apply the Dow Jones LSP Position Sizing Index methodology to the large-, mid- and small-cap segments of the U.S. market. The equity component of each index consists of the 250 largest stocks selected from the respective size-segment index within the Dow Jones U.S. Total Stock Market Index family. Detailed descriptions of the indexes’ construction, calculation and maintenance procedures are provided in the index methodology documents at www.djindexes.com/positionsizing.
All indexes in the Dow Jones LSP Position Sizing Index series are available for licensing as the basis of both passive and active investment funds, including exchange-traded funds, mutual funds and institutional accounts globally.
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The UCITS Alternative Index Blue Chip is up 0.22% this week after ending April down -0.60%. Event-Driven and Emerging Markets are the best performing strategies this week, with gains of 0.95% and 0.61%. CTA (up 0.55%) and Long/Short Equity (up 0.54%) are also positive for the week. The main negative contributors to the UAI Blue Chip performance are Volatility and Equity Market Neutral, with respective losses of -0.88% and -0.56%.
All UAIX perform positively this week except for the UAIX Commodities which is flat. The UAIX CTA is up 0.74% and the UAIX Long/Short Equity is up 0.67%. The UAIX Volatility and Fixed Income are up 0.15% and 0.10%. On a year to date basis, the best performing index is the UAIX Volatility (up 4.13%). It is followed by the UAIX Fixed Income (up 3.43%) and the UAIX Commodities (up 3.16%).
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Press Release – C-View, the UK-based discretionary currency trading hedge fund manager, announced that it has selected alternative assets marketing firm MCAM Group to raise capital for the C-View Currency Managed Account Program (CMAP) and for the C-View Emerging, Developing and Minor Currency Program internationally.
Established in December 1996, C-View currently manages over $350 million USD for a wide range of international institutional investors. The firm was set-up by former Bank of America Global Head of Foreign Exchange Paul Chappell. Since inception C-View’s core focus has been to provide consistent risk-adjusted returns through fundamental/macro-based discretionary currency management services to public and private pension funds, endowments and other financial institutions globally, via managed accounts and fund investments.
Since inception, the flagship C-View Currency Managed Account Program strategy has widely outperformed the Barclays Currency Index in 112 out of 127 rolling three-year periods and has as of March 2012 delivered an annualized AROR of 11.24%.
In October 2011, C-View and its flagship Currency Managed Account Program was selected as one of the two first managers for participation on Morgan Stanley’s new currency managed account platform FX Gateway. CMAP is also available for qualified investors through Deutsche Bank’s FX Select platform.
According to C-View’s Chief Operating Officer Peter Knowles, investors in the C-View Currency Managed Account Program (CMAP) have enjoyed a consistent record of outperformance primarily driven by a diversified and conservative approach with a strong focus on risk management.
“ Our core investment philosophy has helped the strategy to produce strong performance both through robust times and in periods of market crisis. C~View’s investment programmes deliver a base case alpha engine which has produced consistent returns for our investors and with low volatility.” said Knowles.
“ There are substantive opportunities in currencies and increased investor interest in allocations to currency managers as a unique diversifier. We are delighted to be working with MCAM Group who will assist us in further developing our business ” stated C-View’s Founder and Chief Investment Officer Paul Chappell.
Lars Bjoergerd, Managing Director, MCAM Group commented, “C-View is widely considered as one of the most respected names in the discretionary managed currency space. Their decision to engage MCAM Group in driving C-View’s international investor expansion is a strong show of confidence in our ability to assist established, quality hedge fund managers in reaching their asset growth objectives and we look forward to a long-standing relationship with Paul and his team.”
About C-View
C~View Limited was founded in December 1996 by Paul Chappell. Paul Chappell was prior to forming C-View Global Head of Foreign Exchange for Bank of America (BOA). Since inception the company’s core focus has been to provide fundamental/macro based discretionary currency management services to pension funds and other financial institutions globally, via managed accounts and fund investments.
C-View currently manages USD $356 million in assets for a range of institutional investors including public and private pension funds, endowments and foundations. The firm currently offers qualified investors two discretionary managed currency programmes, the flagship C-View Currency Managed Account Program (CMAP) and the C-View Emerging, Developing and Minor Currency Program.
About MCAM Group
MCAM Group is a Geneva-based leading provider of outsourced capital placement solutions and targeted public relations for the alternative investment industry. The firm was set-up in 2009 by Lars Bjoergerd, a former director of Cube Capital, a leading $1.3 bln alternative asset manager with offices in London and Hong Kong.
Mr Bjoergerd was prior to joining Cube Capital a director at Insight Investment Management, one of Europe’s largest institutional asset managers with over USD $240 billion in assets under management.
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30th April 2012 – Trinity Fund Administration is partnering with eClerx, a global provider of knowledge and business process outsourcing solutions to the financial services industry and Arbour Financial Systems, a fund management software provider.
Together these three market leaders are launching TotalHedge3 a full service hedge fund and managed account platform encompassing fund administration, operations, and technology services.
TotalHedge3 is an integrated package of services and technology designed to enhance operational controls, minimize fixed costs and satisfy the needs of institutional investors for maximum transparency through a full range of services–from fund incorporation to day-to-day management–creating consistency in approach and implementation of best practices. On-boarding and implementation may be completed in record time, while guiding users through the whole life-cycle of trade processing, providing front, middle and back office support, including compliance and technology support.
TotalHedge3 is fully customisable, allowing asset managers to choose from a broad range of services and applications in order to meet their specific needs. It is designed to meet the needs of all managers, in particular emerging fund managers seeking a solution which ensures a sound operational system in order to focus their attention on trading strategy and asset raising.
John McCann, Managing Director of Trinity Fund Administration commented, “We have seen a significant rise in emerging managers this year and the launch of TotalHedge3 addresses this important and thriving part of the hedge fund market. The integrated service offering empowers fund managers with a turnkey solution, tackling intensifying cost pressures within the market-place, as well as satisfying institutional investors infrastructure requirements, allowing managers to focus primarily on investing and client relationships rather than regulatory and operational matters. We look forward to working with eClerx and Arbour Financial to offer this full service alternative investment platform”.
Key functionality includes:
Trade Processing — front to back support covering trade capture, affirmations, confirmations and settlements using workflow tools and best practices to minimize operational risk
Fund Administration — comprehensive fund administrative series in portfolio valuation, NAV calculation, fund accounting and bespoke reporting
Technology — complete and fully hosted solution including administrator and prime broker connectivity
Compliance — full service solution for both pre and post trade compliance
Tax, Audit and Regulatory Support — design robust operational and regulatory infrastructure for both start-up and established hedge funds, as well as a proactive approach to manage audit and tax process in order to fulfill various regulatory requirements e.g. Form PF.
About Trinity Fund Administration
Trinity Fund Administration Limited is a global boutique hedge fund solutions company providing middle and back office services to a wide range of investment funds and private vehicles operating predominantly in the alternative investment arena.
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Press Release – SS&C Technologies, a global provider of investment and financial software-enabled services and software, today announced that SS&C Fund Services has been recognized as “Best Administrator – Fund of Hedge Fund Provider Over $30bn”. The award which was presented at the 5th annual HFMWeekEuropean Performance Awards luncheon on March 28, 2012 in London, UK, is an annual program recognizing hedge fund service providers which are producing tangible benefits for their customers and can demonstrate revenue growth, innovation and customer satisfaction.
A panel of senior level industry representatives assessed nominations to determine eligibility and best performers in each category. SS&C was nominated in six categories: “Best Administrator – Client Service Provider Over $30bn”, “Most Innovative Fund Administrator – Over $30bn”, “Best Administrator – Small and Start-Up Firms”, “Best Administrator – Managed Account Services”, ”Best Administrator – Technology Provider” and “Best Administrator – Fund of Hedge Fund Provider Over $30bn”, the category that it won.
Accepting the award was Dave Reid, Senior Vice President and Managing Director, International. “I am delighted that SS&C has received the “Best Administrator – Over $30bn Fund of Hedge Funds Award” from HFMWeek. The award recognizes SS&C’s wealth of experience, best practices and technology, as well as our deep understanding of the EMEA’s business environment.”
“Earning this award confirms the continued strength of our scalable cloud capabilities, operational expertise and leading edge proprietary platforms,” said Punit Satsangi, Managing Director of EMEA Business Development. “This award complements our “Best Administration – Technology Provider” win at last year’s HFMWeek U.S. ceremony. SS&C continues to innovate leading-edge web portal technology, iPad applications and mobile platforms to differentiate SS&C in a rapidly changing market place. Collectively this recognition reflects our commitment to partner with fund managers while delivering mission-critical tools and transparency.”
At December 31, 2011, SS&C’s global fund administration business had US $228 billion in assets under administration and over 600 staff to service the global hedge fund, fund of funds, private equity and managed accounts industry. A full-service independent fund administrator, SS&C provides middle- and back-office services on its proprietary technology platform, among them net asset value computations, risk analytics, investor services and reporting and web services.
About SS&C Technologies
SS&C is a global provider of investment and financial software-enabled services and software focused exclusively on the global financial services industry. Founded in 1986, SS&C has its headquarters in Windsor, Connecticut and offices around the world. 5,000 financial services organizations, from the world’s largest to local financial services organizations, manage and account for their investments using SS&C’s products and services. These clients in the aggregate manage over $16 trillion in assets.
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Press Release – Rothstein Kass, a leading professional services firm to the alternative investment community, has published its sixth annual report on hedge fund industry trends. “Hedge Funds 2.0: Evolution in Action” features the findings of a first quarter 2012 survey of 400 hedge fund managers, representing 771 hedge fund vehicles.
Survey participants were asked to weigh in on a broad range of topics including investment outlook, operational issues and regulatory concerns. Roughly 48 percent of hedge fund managers surveyed indicated that 2012 will be a difficult year for the sector, with nearly 40 percent expressing concern that the United States could enter a “double-dip” recession. Findings suggest that amid ongoing economic uncertainty, hedge fund managers continue to find opportunity, as slightly more than 66 percent of respondents indicated that they plan to raise assets by 25 percent or more this year. Nearly one-third of hedge fund managers do not plan to use leverage in 2012, while over half intend to use less than 2:1 leverage this year.
“In the months following the global economic meltdown, many observers predicted doom for the hedge fund industry, with some anticipating that a more aggressive regulatory agenda and challenging market conditions would lead to significant attrition. At that time, Rothstein Kass stood out as one of the few voices that forecast that the hedge fund community would emerge from the crisis stronger than ever. Our confidence was instilled over decades spent working closely with the sector, and was reinforced by our long-standing view of the industry’s institutionalization,” said Howard Altman, Co-CEO of Rothstein Kass and Principal-in-Charge of the Financial Services Group. “This year, our research shows an industry that continues to benefit from institutional asset flows and efforts to enhance transparency. At the same time, managers are cognizant of the challenges that lie ahead, as legislative efforts move from theoretical to reality.”
Over 70 percent of survey participants report assets under management (AUM) under $500 million, with the remainder reporting AUM in excess of $500 million. Findings suggest that increasing asset flows from pension funds and other institutional investors continue to fuel demand for enhanced transparency. Nearly a third of hedge fund managers polled believe that investor due diligence will take six or more months to complete. Regulatory developments also weigh heavily on managers, as over half indicated concern about the scope and frequency of reporting requirements. Over 40 percent suggested that they are concerned about the staffing and resources that will be required to comply with enhanced reporting requirements. Approximately 30 percent of funds with less than $100 million AUM have registered with the SEC, according to the research.
“Hedge fund managers are often confronted with a growing array of responsibilities that can detract from the overall focus on generating investment returns. For many institutional investors, operational and reporting capabilities are as important as investment performance. With competition for capital intense and due diligence processes expanded, the imperative for all funds – especially emerging managers – to ‘act institutional’ in all respects has never been greater. Fortunately, we’re seeing the emergence of a new generation of hedge fund managers that are well-equipped to tackle this challenge. These professionals have grown up within the hedge fund sector, developing the specialized expertise required to position their firms for success in the future,” said Mr. Altman.
Among other notable survey findings:
Nearly 80 percent of respondents believe seeding is critical to a successful launch this year
UCITS vehicles, despite their popularity in Europe, have yet to infiltrate the U.S. marketplace. Of the 400 hedge fund firms and 770 funds polled, only 17 UCITS products were reported
The percentage of women and minority owned firms remains low, at 5.8 percent and 10.3 percent, respectively. However, firms that have launched in the last three years are three times more likely to report 50 percent or more women and minority ownership
“A major part of the hedge fund industry allure is the diversity that the community has come to represent. The sector’s proliferation means that there are funds and strategies suited to a wide range of specific investment objectives. Until very recently, however, this diversity has not extended to the number of women in senior roles at hedge fund complexes. One of the most encouraging findings of our latest research suggests that women are finding increased opportunity at emerging hedge funds. From our experience, we’re seeing growing interest from entrepreneurial women seeking to launch hedge funds, as well as growing consensus that greater concentrations of women in the industry will bring needed perspective as the sector continues its evolution,” said Kelly Easterling, Principal-in-Charge of Rothstein Kass’ Walnut Creek office.
About Rothstein Kass:
Rothstein Kass is a premier professional services firm that has served privately held and publicly traded companies, as well as high-net-worth individuals and families, for more than 50 years. As trusted advisors to our clients, Rothstein Kass provides accounting, auditing and tax services, as well as a full array of integrated services, to clients across industry spectrums and in all stages of organizational development. At the core of Rothstein Kass’ remarkable success lies our commitment to hiring, developing and retaining a team that possesses an entrepreneurial spirit mirroring that of the sophisticated business and financial services communities that we serve.
Rothstein Kass Business Advisory Services professionals provide value-added and result-oriented consulting services to clients across industries in the areas of strategy, operations, technology, risk, compliance, dispute resolution and investigations. Rothstein Kass Business Advisory Services, LLC is an affiliate of Rothstein, Kass, a premier professional services firm serving clients for more than 50 years.
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On behalf of South African Arts International, Ltd. (SAAI), Victor Mooney hand delivered an official 2010 World Cup Match Ball and the soil from the home of Nelson Mandela to SkyBridge Capital’s corporate headquarters in midtown Manhattan last week. The gift was designated for their Aspire Giving Foundation charity auction.
In a note to Mr. Ray Nolte and Mr. Anthony Scaramucci, hedge fund giant SkyBridge Capital managing partners, Mr. Mooney said, “We are on the crisp of a project that is percolating again with some of the most impoverished and neglected children in New York City. This project embeds the basic principle of never giving up and I’m committed to seeing it completed. Our mission is aligned with the vision of Aspire Giving Foundation”
Afterwards, Ms. Amanda J. Ober, Vice President – Global Development & External Affairs for SkyBridge Capital said, “Many thanks for your lovely note, generous gift and for all you are doing to help children in need in NYC! We sincerely appreciate you reaching out”.
With a short boost of support, Mooney’s twenty-four foot custom made rowboat will be shipped from Sao Paulo, Brazil on May 12 to New York City.
On World AIDS Day, December 1, Mr. Mooney will embark on a fourth bid to row across the Atlantic Ocean. Starting from the Canary Islands, he plans to row 5,000 miles to New York City, with his first port of call being the British Virgin Islands (BVI). The children will be able to communicate with him in real-time and the teachers will include this into their respective lesson plans. Sponsors will be invited for a private reception hosted by His Excellency, William Boyd McCleary, Governor of the British Virgin Islands in Tortola.
The BVI has created a robust regulatory system in addition to a mixture of innovative legislation. The Securities and Investment Business Act (SIBA) responds to the requirements of IOSCO and enhances the BVI’s attractiveness by establishing the right legal and regulatory framework for institutions, managers and investors. The new Insurance Act ensures full compliance with the International Association of Insurance Supervisors’ core principles; it simplifies the BVI’s insurance regime and increases transparent. Both laws are aimed at strengthening the regulatory regime. The BVI is also committed to the OECD’s principles for effective exchange of information and transparency, having already signed 17 Tax Information Exchange Agreements (TIEAs) with countries such as the UK, Australia, China, France and the US.
In partnership with the XIX International AIDS Conference 2012 in Washington, D.C., Mr. Mooney will do a six-hundred mile coastal row from New York City to the nation’s capital in July. Mr. Mooney’s port of call stops will include Atlantic City, Philadelphia, Delaware, Annapolis and Baltimore. Former U.S. President, George W. Bush will be honored for the creation of U.S. Presidents Emergency Plan For AIDS Relief (PEPFAR), which saw his groundbreaking bi-partisan legislation bring anti-retroviral medicine to regions most affected by the epidemic.
South African Arts International (SAAI) mission is to inspire and train at-risk children all over the world; increase computer literacy levels; introduce principles of global business; facilitate worldwide cultural understanding; to provide scholarships, sponsor cultural events, artistic and educational seminars. The Goree Challenge IV Project has received over 75 corporate sponsors and numerous endorsements from international, national and local health governing bodies. A limited number of sponsorship opportunities are available, please email goreechallenge (at) gmail (dot) com or visit www.goreechallenge.com.
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Northern Trust has been named Best Administrator for UCITS funds at HFMWeek magazine’s European Hedge Fund Services Awards, for the second consecutive year.
The 2012 Awards, which took place in London in March, recognised companies that outperformed their peer group in 2011. The annual awards are judged quantitatively and qualitatively to assess financial progress, growth and genuine innovation.
Northern Trust was also ‘highly commended’ in the category for best administrator with over US$30billion in assets under administration, for funds of hedge funds.
Northern Trust was selected from a short list by a panel of judges comprising senior level industry professionals, who said, “Northern Trust was a worthy and clear winner that stood out for its quality of service and strong UCITS expertise.”
“We are delighted to win this award for the second year in a row, as it shows that not only our clients, but also independent industry professionals, recognise Northern Trust’s leadership in supporting UCITS hedge funds, and our continued commitment to this specialist sector of the market,” said Peter Sanchez, chief executive officer, Northern Trust Hedge Fund Services.
“Investor demand for UCITS-compliant hedge funds continues to rise and fund managers want a provider that can deliver world class, innovative fund administration and custody services,” Sanchez said. “We continue to invest in our service offering and are enhancing our front, middle and back office services to clients. In the last 12 months, Northern Trust has continued to automate processes that, typically, remain manual in the industry as a whole. For example, we’ve launched a fully-integrated, leading compliance-monitoring system that can handle both UCITS IV restrictions and prospectus rules, and we’ve brought together expertise from across our broader organisation to create a tax-efficient solution for the new UCITS IV master/feeder structure — an important provision in the UCITS IV Directive.”
Northern Trust’s hedge fund administration capabilities were enhanced in 2011 with the acquisition of Omnium LLC, a specialist, global hedge fund administrator. Northern Trust’s existing hedge fund administration activities and Omnium LLC have been brought together under Northern Trust Hedge Fund Services. Key milestones in the integration of the two businesses have been reached and Northern Trust continues to win new clients.
Northern Trust provides fund administration and global custody services to clients investing in a range of alternative asset classes — including hedge funds, funds of funds, real estate and private equity — as well as traditional and exchange-traded funds. Northern Trust provides a comprehensive range of UCITS hedge fund services from its specialist servicing centres in Ireland and Luxembourg, supported by its wider network and teams in North America, Asia Pacific and the Middle East. Services include: fund launch project management; fund administration; custody; banking; trustee; corporate reporting; value at risk (VaR) calculation and oversight; and compliance analytics to support risk management requirements.
As of 31 December 2011, Northern Trust had more than US $170 billion in assets under administration for hedge funds and funds of hedge funds.
About Northern Trust
Northern Trust Corporationis a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2012, Northern Trust had assets under custody of US$4.6 trillion, and assets under investment management of US$716.5 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.
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US Treasury – The Dodd-Frank Act creates a comprehensive framework of regulation for the OTC derivatives markets. The elements of this framework include regulation of dealers, mandatory clearing, trading, and transparency. The framework established under the Dodd-Frank Act is consistent with that of the G-20. The CFTC and SEC are well into their rule-making process. Once again, the United States and the EU have closely cooperated in this area, and have adopted parallel approaches to important issues such as central clearing, trading platforms, and reporting to trade repositories.
While the reforms set forth a framework for on-exchange-traded derivatives, it is also important for us to make progress on establishing a global regime for margin for bespoke, un-cleared derivatives transactions. Both the United States and the EU support international work on global margin standards for trades that are not cleared through a central counterparty. Margin requirements are critical to promoting the safety and soundness of the dealers, and thereby lower risk in the financial system.
C-View, the UK-based discretionary currency trading hedge fund manager, today announced that it has selected alternative assets marketing firm MCAM Group to raise capital for the C-View Currency Managed Account Program (CMAP) and for the C-View Emerging, Developing and Minor Currency Program internationally.
Established in December 1996, C-View currently manages over $350 million USD for a wide range of international institutional investors. The firm was set-up by former Bank of America Global Head of Foreign Exchange Paul Chappell. Since inception C-View’s core focus has been to provide consistent risk-adjusted returns through fundamental/macro-based discretionary currency management services to public and private pension funds, endowments and other financial institutions globally, via managed accounts and fund investments.
Since inception, the flagship C-View Currency Managed Account Program strategy has widely outperformed the Barclays Currency Index in 112 out of 127 rolling three-year periods and has as of March 2012 delivered an annualized AROR of 11.24%.
In October 2011, C-View and its flagship Currency Managed Account Program was selected as one of the two first managers for participation on Morgan Stanley’s new currency managed account platform FX Gateway. CMAP is also available for qualified investors through Deutsche Bank’s FX Select platform.
According to C-View’s Chief Operating Officer Peter Knowles, investors in the C-View Currency Managed Account Program (CMAP) have enjoyed a consistent record of outperformance primarily driven by a diversified and conservative approach with a strong focus on risk management.
“Our core investment philosophy has helped the strategy to produce strong performance both through robust times and in periods of market crisis. C~View’s investment programmes deliver a base case alpha engine which has produced consistent returns for our investors and with low volatility.” said Knowles.
“There are substantive opportunities in currencies and increased investor interest in allocations to currency managers as a unique diversifier. We are delighted to be working with MCAM Group who will assist us in further developing our business” stated C-View’s Founder and Chief Investment Officer Paul Chappell.
Lars Bjoergerd, Managing Director, MCAM Group commented, “C-View is widely considered as one of the most respected names in the discretionary managed currency space. Their decision to engage MCAM Group in driving C-View’s international investor expansion is a strong show of confidence in our ability to assist established, quality hedge fund managers in reaching their asset growth objectives and we look forward to a long-standing relationship with Paul and his team.”
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SkyBridge Capital (SkyBridge), an alternative investment firm, today announced the continued expansion of its global distribution footprint with the addition of five new members to its sales team and new partnerships with major distribution platforms.
SkyBridge manages or advises on approximately $6.2 billion of assets (as of February 29, 2012) across a fully-integrated suite of hedge fund products, addressing every type of market participant from large institutional investors to individual retail investors. On the back of the firm’s ongoing asset growth and to address the needs of its clients and distribution partners, the expansion is being supported by the addition of five people to its Global Distribution team in the U.S. and abroad.
Notably, Justin M. Arasin, based in New York, New York, and John L. Langston, based in Houston, Texas, have joined as Directors of Global Distribution, along with two additional support staff members based in New York. Henrik P. Molin has also joined as Director of Marketing for SkyBridge’s European operation and is based in the firm’s Zürich, Switzerland office.
“Due to the demand for our hedge fund product portfolio, we are strategically bolstering our Global Distribution team with the addition of new team members and platform partnerships,” said Ray Nolte, Managing Partner and Chief Investment Officer at SkyBridge. “This steady expansion provides access for an even broader range of market participants to diversify portfolios and enter the alternative investment arena.”
Mr. Arasin joined SkyBridge from Arden Asset Management, where he served as an Executive Director on the Client Service and Development team. Prior to a merger with Arden in 2011, Mr. Arasin was a Regional Director at Robeco-Sage, where he spent approximately six years managing the sales initiatives for the Eastern and Western Divisions as well as maintaining the Latin American investor base.
Prior to joining SkyBridge, Mr. Langston was National Sales Director for Salient Partners and was responsible for distributing one of the industry’s largest registered alternative investment funds modeled after large university endowments. He has more than 13 years of experience in the financial services industry and is a Chartered Alternative Investment Analyst.
Prior to joining SkyBridge, Mr. Molin served in several roles in the financial services industry. His career includes tenures as Head of Development of FQS Capital Management, a fund of hedge funds founded by Dr. Robert J. Frey, the former Managing Director of Renaissance Technologies; Head of Business Development of Ironshield Capital; International Business Development Director of Paris-based Systeia Capital Management; and Head of Trading of ORN Capital.
About SkyBridge Capital
Founded in 2005, SkyBridge Capital is a global alternative investment firm with approximately $6.2 billion in total assets under advisement or management as of February 29, 2012. The firm provides investment management products, portfolio management and advisory services addressing every type of market participant. SkyBridge offers investment services across four business lines: Commingled Multi-Manager Fund Products, Custom Portfolios, Hedge Fund Seeding and Hedge Fund Advisory Services. Headquartered in New York, New York, the firm also has a presence in Zürich, Switzerland.
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