Hedge Funds Focus More Time, Personnel On Compliance

Oct 28 2013 | 1:22pm ET

Hedge fund chief compliance officers are dedicating up to 50% more time to legal compliance and regulatory matters, according to a new mini-poll from Deutsche Bank Markets Prime Finance

In July 2013, DB surveyed 44 European and US hedge fund managers representing nearly $325 billion in assets under management.

In addition to the increased time spent on regulatory matters by COOs in the past two years, there's been an increase in compliance-dedicated staff: more than 40% of respondents said they'd hired more than one non-investment full-time equivalent over that time period to help prepare for and manage new regulatory requirements.

The majority of managers surveyed also said their non-headcount related costs had increased up to 25% over the last two years. 

The UK Financial Conduct Authority has given hedge fund managers until July 2014 to become authorized under Alternative Investment Fund Managers Directive, a deadline 82% of the hedge fund managers polled are preparing to meet although 39% are not sure 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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