Technology Features That Promote Hedge Fund Compliance Management

Across the globe, more and more hedge fund companies are investing in technologies to promote compliance management in their operations. This trend towards promoting hedge fund compliance through technology has been observed across small, mid-size, and large fund administrators: many are indeed willing to allocate the budget needed to enable their firms to comply with new regulations.

Triggering this development would be the increased reporting requirements set by SEC and CFTC, as well as the growing demands of investors who seek to know more about the performance of their funds. And these requirements are addressed by the following features of today’s set of compliance management platforms:

Portfolio management. Hedge fund managers benefit from advanced tools that allow for the monitoring limits, blocking trades that are prohibited by law, and recording of trade allocations. These allow for efficient management of trade portfolio and prompt and accurate reporting of positions in securities.

Reporting. The reporting requirements of authorities demand that hedge fund companies maintain infrastructure for the processing and storing large data, which can be a costly endeavor for smaller and mid-size businesses. This has encouraged many of them to purchase commercial hedge fund software, develop technology solutions in-house, or outsource to asset servicing firms.

Client relations management. Hedge funds management entails keeping track of a huge body of communications between investors and managers. Monitoring and storing this communication is not only important for compliance to regulatory demands; they are also necessary for the review of transaction histories and the conduct of post-mortem that clients may wish to embark in.

Recording of employee accounts. Recording, reviewing, and assessing personal account brokerage statements of employees is a tedious process that should nevertheless be encouraged to counter-check for suspicious or irresponsible trading practices. Through features that allow for surveillance and recording of individual accounts, hedge fund companies can ensure that they are after only the best execution of trade transactions.

Compliance management. Finally, new technologies have allowed hedge fund managers to more easily and conveniently adjust to the increased complexity of hedge fund compliance. These tools include compliance calendars with reminders for submission deadlines and registrations, automated recording, among other features.

With authorities in the securities sector here and abroad becoming stricter when it comes to the implementation of compliance regulations, hedge fund managers can truly benefit from forging relationships with asset servicing firms that can provide advanced hedge fund compliance management technology solutions.