Another guide to (obvious) hedge fund best practices
Sep 17th, 2009 | Filed under: Hedge Fund Regulation, Today's Post
As hedge funds and funds of hedge funds dust themselves off and start looking to rebuild and reallocate cash, the words “best practices” are suddenly coming back in vogue, with standards and guidelines on what investors can and should expect to be followed if they are going to venture back into the funds of funds waters coming out of the woodwork.
The International Organization of Securities Commissions (IOSCO) is the latest regulatory body to release a short list of standards investors in particular should be looking for when it comes to the fund of hedge funds group — recommendations mostly focused on liquidity risk and due diligence.
Of course, AllAboutAlpha along with most others in the alternatives industry take due diligence recommendations very seriously, especially when they come from regulatory agencies assigned with the tall mandate of uncovering fraud and other wrong-doings.
Which is why we were keen to get our hands on Iosco’s Elements-of-International-Regulatory-Standards-on-Funds-of-Hedge-Funds-Related-Issues-Based-on-Best-Market-Practices report released this week, in the hopes of gleaning some valuable new insights on the nuances of proper, intricate due diligence.
Among the agency’s recommendations: More…
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[...] all about alpha says ” Another guide to (obvious) hedge fund best practices “ [...]
“What would be nice would be to see more statistical and empirical “stress test” applications made part of a broader industry mantra …”
True but the reporting standards need to be consolidated, rationalized first with a technological aggregating soluition it in the middle. I suppose that’s what the FSA/SEC reporting framework is gravitating to.
Where are the investor demands in all this? Who is the voice of all the investment fiduciaries out there? By definition, a fiduciaries obligations to his/her clients sets the bar far higher for reporting than any regulatory reporting requirements. All these regulators, standards bodies are spitting out the regulatory moors but, frankly, if one CalPERs, Harvard, et. al. stands up and says these are my standard reporting requirements, the industry will be motivated economically to comply and can rally around a set of real and specific standards.
Until regulators, standards bodies get past the “what you SHOULD do” to “how you CAN do it” it’s all fluff on the ground.