Friday, 3 December 2010

The new reporting requirements under Dodd Franks

As the whole Hedge Fund Industry knows there is a tidal wave of new legislation on the way. Both AIFM in Europe and the Dodd Franks Act in the US will require most Hedge Fund Managers to register and provide detailed regular reporting.

Up until this point there has been no clear picture of what exactly this reporting would entail. This has been a concern for many Managers and Administrators especially as Dodd Franks becomes law next July and they will need time to ensure their operational area's can meet these reporting requirements.

This weeks Hedge Fund Alert had a very interesting article about the SEC for the first time quietly showing its draft reporting requirements to a number of large hedge funds (ahead of publishing the official reporting requirements in Qtr 1 next year).

Reading between the lines I think they got a bit of a shock. The level of reporting sounds very detailed and will have to be done at least twice a year - for AUMs, trading positions, Counter-Party arrangements, Valuation practices, Leverage use and details of Sidepockets and any illiquid securities. None of this information is to be made public but I imagine that won't help many Fund Managers sleep any easier at night as they live in fear of leaks to the public or competitors.

For Operational departments at Hedge Fund and Administrators it will mean a rush to get new data amd reporting  feeds in place before the July deadline. Hopefully some of it they will be producing already for internal use but I imagine the first half of next year will see a flurry of activty within these teams worldwide as they try to get their reporting capabilities in place before the new regulations start to bite.

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