Hedge fund COOs rise to new regulatory hurdles (Deutsche Bank)

October 2013

KEYWORDS: AUM, assets under management, European Union, Hedge Fund Managers, chief operating officer, Hedge Fund Regulation, Financial Conduct Authority, AIFMD, hedge fund investor, hedge fund infrastructure, compliance requirements, Survey, marketing, United Kingdom, hedge fund registration, EU Marketing Passport, remuneration

Authors:

Deutsche Bank

Organizations:
  • Deutsche Bank

Summary:

Mini-poll results of US and European funds on legal, compliance & regulatory developments

  • In July 2013, 44 European and US hedge fund managers were surveyed, representing nearly $325 billion in assets under management (“AUM”).
  • The amount of time that COOs dedicate to legal, compliance and regulatory matters has increased substantially over the past two years. Globally, a COOs time spent on legal and regulatory matters has increased up to 50% more for the majority of managers surveyed.
  • Over the past two years, more than 40% of respondents have hired more than one non-investment full-time equivalent (“FTE”) to help prepare for and manage new regulatory requirements.
  • Globally, the majority of managers surveyed estimate that their non-headcount related costs have increased up to 25% over the last two years.
  • The UK Financial Conduct Authority (FCA) has given hedge fund managers until July 2014 to become authorized under AIFMD. 82% of hedge fund managers are preparing now to submit their authorization applications in 2014, in line with the FCA’s recommendations.
  • 39% of the managers surveyed are still uncertain as to whether AIFMD will bring additional investment from institutional allocators.
  • Marketing to European investors continues with a significant proportion of managers in Europe   (35%) and the US (43%) choosing to utilize transitional marketing provisions. Alternatively, half of managers have decided to respond only to incoming investor requests for information regarding their funds until they have further clarity on marketing into Europe under AIFMD.

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