Compliance Takes Big Bite Out Of Hedge Funds

Oct 18 2013 | 12:57pm ET

A new study puts a price on the rising cost of hedge-fund compliance.

The average hedge fund spends between 5% and 10% of its operating costs on compliance, according to KPMG International, the Managed Funds Assocition and the Alternative Investment Management Association. Hedge-fund compliance costs have been rising in the face of a raft of new regulations in both the U.S. and Europe.

"It's absolutely raising the barriers to entry," KPMG's Robert Mirsky said. "I don't think the industry is opposed to sensible regulation, but you have to be very careful that you don't layer on so much that it stifles the ability to innovate and the ability to the industry to grow."

Hedge funds with more than $5 billion in assets paid an average of $14 million on compliance. Those with between $1 billion and $5 billion average $6 million, and those with less than $1 billion $700,000.


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Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

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