Alongside other areas, the Dodd-Frank Act has put the spotlight on the hedge fund industry and has imposed unprecedented reporting requirements.

One example is the Securities and Exchange Commission (SEC) decision to alter Form ADV (this is the US registration form for investment advisers) and make the entire form public on its website. Form ADV is now also a “must-file” document for advisers who manage $150 million or more.

Another example is the decision in 2011 by the SEC and the CFTC (Commodity Futures Trading Commission) to impose a new reporting rule. Starting in 2012, the new Form PF (which stands for “private funds”) will need to be filed by many investment advisers. If you meet the three conditions below, you will need to file Form PF:

  • You are registered or required to register with the SEC,
  • You manage one or more private funds,
  • You have at least $150 million in private fund assets under management.

Form PF filers fall into two categories: large private fund advisers and small private fund advisers. Smaller hedge funds will need to file Form PF annually whilst large hedge funds will be required to provide to file quarterly and also provide additional data.

The form contains several reporting requirements. Amongst other information, all Form PF filers must report:

  • The five counterparties to which the fund has its greatest net credit exposure,
  • Ownership attributable to the fund’s five largest investors.

The 2 reporting requirements above clearly show the importance for hedge funds and their administrators to have an effective entity data management system in place.

 

There are challenges but help is at hand

  • Data aggregation: In most cases, the entity data that needs to be reported on resides in more than one system or source. Information needs to be collected from the front, middle and back offices. Seldom would all of these departments share a common data repository. Some Hedge Funds may not even have the infrastructure or the resources internally to support all of the traditional processes and some data may be sitting with administrators or other service providers.
    Joss Technology can provide a single, integrated solution to handle all your entity data. We can connect to all your internal (both developed internally or provided by vendors) and external sources. We can help you achieve data aggregation rapidly, efficiently and in a cost-effective manner.
  • Data alignment: Data coming from disparate systems will usually be in different formats and will present different levels of completeness. Through our out-of-the-box converters and normalization tools, you can cleanse and integrate the information in a matter of days. We can even enrich the data for you through our connectors with data vendors.
  • Data Maintenance and Automation: You have built a single counterparty master. You can now rely on consolidated data to ensure a thorough and accurate reporting. The next step is to disseminate that information. We work with you to push your centralized entity data where it is needed. We go even further by streamlining the entire data processes as much as possible. Our aim is that you produce the information required by Form PF without having to manually aggregate content from multiple sources or key in data. With our workflow engine, we will minimize future efforts by automating your internal and external data activities.

 

In a nutshell

One of the main hurdles to ensure compliance is the entity data component. We offer easy-to-implement solutions that can be quickly integrated within your existing infrastructure, workflows and processes. We work with both hedge funds and service providers (including fund administrators and prime brokers) so get in touch and we will gladly discuss how we can alleviate the pain of compliance with Form PF.