HFSB Assumes Oversight For Open Protocol Risk Reporting

May 30 2017 | 10:46pm ET

The Hedge Fund Standards Board has become co-chair of the Open Protocol Working Group, assuming oversight for the effort to standardize the collection and reporting of alternative investment fund risk information. 

The Open Protocol template is currently is used by funds with over $1 trillion in assets under management, the HFSB said in a statement, and it will become the fourth item in the organization’s Toolbox of guidance on practical issues of interest to managers, investors and fund directors. Other items in the Toolbox include information on Cyber Security, Administrator Transparency and the Standardized Board Agenda.

Open Protocol was developed in 2011 by a working group of leading investors, managers and other industry stakeholders to improve alternative investment fund transparency and to aid investors in aggregating their exposure across funds. 

The Open Protocol Working Group will continue maintaining and developing the template to ensure it remains up-to-date, HSFB added, and will be co-chaired by Albourne Partners and the HFSB. 

“Better risk disclosure by investment funds has been a priority for both investors and regulators in recent years,” said Dame Amelia Fawcett, chairman of the HFSB, in the statement. “Investors are looking continuously for better ways to aggregate risk information about their investments…[while] regulators have started collecting data to assess potential systemic risk concerns. Open Protocol allows investors to harness data with aggregate risk exposures, while managers can streamline their own reporting to investors.”

The HFSB was formed in January 2008 as the standard-setting body for the alternative investment industry. It is custodian of the Hedge Fund Standards, which create a framework of transparency, integrity and good governance for the industry, facilitate investor due diligence and complement public policy. To join, signatories must show they uphold the group's standards and will adhere to a range of best practices and standards in such areas as investor communication, proxy voting, conflicts of interest, asset valuation, and risk management. 

The HFSB is supported by more than 125 alternative investment managers with approximately $1 trillion in aggregate assets, and by more than 60 institutional investors investing over $800 billion in hedge funds.

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