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West Palm Beach (HedgeCo.net) – Global alternative investment industry voice, The Managed Funds Association (MFA) announced that it is joining the major derivatives dealers (the Major Dealers) in presenting a letter to global industry regulators. The letter establishes new commitments addressing key concerns raised by global legislators such as the G20, European Commission and the U.S. Department of Treasury.
MFA members are professionals in hedge funds, funds of funds and managed futures funds, as well as industry service providers. The association first joined the Major Dealers in presenting a letter to global regulators detailing operational targets and other industry commitments in March 2008.
The letter outlines a firm commitment towards strengthening the over-the-counter (OTC) derivatives infrastructure under the auspices of the OMG and its constituents and partners, including the newly formed Board Oversight Committee (IBOC) of the International Swaps and Derivatives Association (ISDA). MFA is dedicated to continuing its collaboration with global regulators, the Major Dealers, buy-side institutions and service providers to reduce risk and improve market infrastructure and practices across OTC derivatives and other financial products.
Richard H. Baker, MFA President and CEO, said, “ MFA , on behalf of the alternative investment industry, is committed to proactively developing and advancing these critical commitments for reducing counterparty and systemic risks and improving operational efficiency in OTC derivatives processing. MFA fully endorses the collaborative efforts with global regulators to support commercially viable centralized clearing platforms, to universally report all OTC derivatives trades and to promote sound business practices. MFA considers today’s letter to be an important step forward for OTC derivatives markets and looks forward to continuing our participation in the design of future steps.”
MFA and its co-signatories are committed to implementing changes to risk management, processing and disclosure that will significantly transform the risk profile of these important financial markets. The OTC derivatives markets provide important flexibility in terms of products and execution and will benefit from a strengthened infrastructure.
Commitments to reduce systemic risk in the OTC derivatives markets include:
Implementing data repositories for non-cleared transactions in the OTC derivatives markets to ensure appropriate transparency and disclosure, and to assist global supervisors with oversight and surveillance activities.
Clearing for OTC standardized derivative products.
Enabling customer access to clearing through either direct access as a clearing member or via indirect access, including the benefits of initial margin segregation and position portability.
Delivering robust collateral and margining process, including portfolio reconciliations, metrics on position and market value breaks, and appropriate dispute resolution mechanics.
Updating industry governance to be more inclusive of buy-side participants through collaborative partnerships among the Major Dealers, MFA and other trade associations. Continuing to drive improvement in industry infrastructure, as well as engage and partner with supervisors, globally, to expand upon the substantial improvements that have developed since 2005.
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New York Times Blogs – The biggest regulatory changes since the 1930s are bearing down on the U.S. securities and investment industry, and many firms are ill-prepared, according to a new study by research firm TowerGroup.
From derivatives and hedge funds to capital standards and short selling, the range of issues “encompasses almost every line of business and every functional area,” TowerGroup senior research director Dushyant Shahrawat told Reuters.
Business models will adapt or perish in the new order, which regulators aim to make more transparent, accountable and globally consistent, according to the report released on Thursday.
Wall Street Journal Blogs – Wasim Rehman, the 28-year-old head of risk controls at the hedge fund manager Marshall Wace, has resigned from the partnership and plans to retire from the investment industry.
In a statement to the market this morning, Marshall Wace said Rehman would continue as a consultant to the company, initially full-time as chairman of the firm’s quantitative oversight committee, but then becoming part-time and “thereby fulfilling his desire to pursue other opportunities outside of the industry.”
GEORGETOWN, GRAND CAYMAN – January 26, 2009 – Caledonian Global Fund Services, a provider of specialized administration services to the alternative investment industry, today announces the completion of its SAS 70 Type I certification. SAS 70, or Statement on Auditing Standard, is an internationally recognized auditing standard developed and maintained by the American Institute of Certified Public Accountants (AICPA) and is awarded to service organizations that have implemented stringent internal controls. High quality operations and internal control effectiveness are of paramount importance across all industries, especially those that deal with financial transactions and critical data. The SAS 70 Type I audit was performed by leading independent auditor Grant Thornton, LLP.
Managing director of Caledonian Fund Services located in the Isle of Man, Gordon Wilson, said obtaining this certification represents the culmination of a rigorous process involving a far reaching review of all processes and procedures. “Our control environment has successfully withstood this review with no exceptions noted, an outcome of which we are particularly proud,” he added.
“In light of the current state of the financial services sector, we have taken special care to embed extensive internal controls throughout our organization” said David Walker, Managing Director. He added, “our existing clients, together with potential new clients, can see that we have committed to the highest of industry standards, and that we are a robust, effective and trustworthy partner.”
The Group’s consultant who assisted with the SAS 70 certification was Boris Onefater, President and Chief Executive Officer of the Constellation Investment Consulting Corporation. Over the course of his career, Mr. Onefater performed various executive roles for a $19 billion investment management firm, and served as a Partner of a “Big” 4 Professional Services Firm in New York. He was also the Chairman of the Board of a proprietary mutual fund family. Constellation is one of the best known names in the field of strategy, infrastructure and risk management consulting to the investment industry.
Earlier this month, the financial website Fund Domiciles.com named Douglas-based Caledonian Fund Services (Europe) Ltd. as the Best Fund Administrator in the Isle of Man.
ABOUT CALEDONIAN
Caledonian Global Fund Services (www.caledonianfs.com) administers over $13 billion in assets and offers a fully outsourced and highly automated front to back office solution for hedge fund managers. Our services include back office accounting, mark to market pricing, cash and position reconciliation, management and incentive fee calculations, income and expense accruals, web based investor reporting, anti-money laundering compliance, and US tax reporting.
Caledonian Global Fund Services is part of the Caledonian Group which was founded in 1970. The firm has principal offices in Chicago, the Cayman Islands, and the Isle of Man, a marketing office in New York, and an institutional quality operations center in Orlando, Fl.
The Washington Times – Hedge-fund managers say Bernard L. Madoff may succeed where Christopher Cox failed: forcing regulation of their $1.5 trillion industry.
Mr. Madoff’s purported bilking of investors by up to $50 billion begins to uncover a part of the investment industry that has skirted government scrutiny. Although the 70-year-old was registered with the U.S. Securities and Exchange Commission, the agency Mr. Cox heads, fund executives who fed him customers’ money weren’t.
"This is an Enron moment for hedge funds," said Peter Rup, chief investment officer at New York-based hedge fund Orion Capital Management LLC, with $400 million in assets under management. "Regulation would be welcome, primarily from a trust standpoint."
Bloomberg – Credit markets have fallen so far that they are providing a "once in a lifetime opportunity," and investors are still selling.
Prices of loans rated below investment grade declined to a record low 66.1 cents on the dollar, virtually guaranteeing investors get their money back, based on historical recovery rates, according to data compiled by Standard & Poor’s. Yields on corporate bonds show investors expect 5.6 percent of the market will go bust, the highest default rate since the Great Depression, according to Christopher Garman, chief executive officer of debt research firm Garman Research LLC in Orinda, California.
While central banks injected $3 trillion into the global economy, credit markets are tumbling because banks are clamping down on lending, forcing investors to unload assets they bought with borrowed money. The Federal Reserve said Aug. 11 that its quarterly survey shows most "domestic institutions reported having tightened their lending standards and terms."
