In the wake of the 2008 financial crisis, which prompted a call to stricter regulations across the board, the European Commission decided to develop the Alternative Investment Fund Managers Directive (AIFMD). The European Commission pointed out that managers of alternative investment funds are responsible for the management of a significant amount of invested assets and can exercise an important influence on markets and companies in which they invest. Furthermore, the Commission believed activities of such alternative investment funds may amplify risks through the financial system. The directive has been developed to address a number of risks identified by the Commission relating to alternative investment funds, including systemic risk, through a single set of rules that would apply across the board.
The Alternative Investment Fund Managers Directive came into force on 22nd July 2013. Since then, the alternative investment fund managers, including managers of hedge funds, private equity firms and investment firms, have been working on submitting the 35-page application form to get registered under the directive before it comes into effect in less than four months.
The Alternative Investment Fund Managers Directive will most likely affect private equity funds if they are located in or have investors in the European Union and are identified as the alternative investment fund manager. Fund managers at private equity firms will need to obtain and comply with transparency and the reporting requirements of the directive in order to manage and market private equity funds within the EU.
Categorized under: Hedge Fund Regulation
Is Dropbox becoming a noun? For the sake of this article, let’s say it is.
With over 200 million users, Dropbox (and similar services) is gaining popularity based on its ability to allow users to share files and sync data between devices. These capabilities are very appealing but rely on a public cloud platform that can introduce security and compliance concerns for hedge funds.
Dropbox made headlines last year when it was discovered by security researchers that the service opens some files once they are uploaded. While Dropbox provided an explanation, this can be a serious issue for businesses where employees are using Dropbox to share sensitive company and investment data.
So are your employees using Dropbox? Probably. A study conducted by Gigaom of 1,300 business professionals found that one out of five use public file sharing services, such as Dropbox, with work documents. And, half of those users know their companies have rules against it. This raises the question, how do you give employees access to a valuable tool in a way that meets compliance and security protection obligations?
It has been said that cyber weapons can be as dangerous as weapons of mass destruction. To emphasize this, at last night’s FBI Citizens Academy seminar on cyber security in financial markets, the speaker noted that if you take out an industry (think financial, teleco) you can cripple an entire country.
But just how would this happen? What’s in a hacker’s tool kit? Quinn Shamblin, executive director of information security at Boston University, provided a glimpse into the cyber security underworld.
Targeting Your Favorite Device
Let’s start with Mobile Device Security. Hackers are shifting their focus and resources to mobile devices. They recognize that a user’s life is virtually encapsulated on his/her mobile device. From contacts and email to documents, passwords and banking apps, mobile devices now hold as much as or more personal information than PCs or laptops. And most devices do not have anti-virus/malware software installed.
Just last Friday, Apple released a critical update to its iOS 7 operating system after a flaw was identified that could give an attacker with a privileged network position the ability to capture or modify data in sessions protected by SSL/TLS (aka public key encryption). Following that announcement, researchers at a cyber security firm (FireEye) published a proof of concept for a surveillance app that, if created and distributed by hackers, could capture every tap on an iPhone’s screen. The information captured, including passwords and credit card numbers, would be accessible to the attacker. These are just two examples of the cyber security threats facing mobile devices. Users need to be aware that these threats exist and practice smart computing on all devices.
In honor of our 400th post on here on Hedge IT (400 - wow!), we are celebrating with our annual blog awards. We've gathered the most popular articles according to our readers and included a few of our personal favorites, too.We hope you enjoy!
Have you been enamored by the coverage of the Winter Olympics the last two weeks? We sure have. And watching all of these great sports we don’t normally get the chance to witness got us thinking – there are a lot of similarities between technology and Olympic sports. They’re both complex in many ways and require experts (engineers and athletes) who are the best of the best at what they do.
One of our favorite sports to watch is curling. And we couldn’t help but notice that Olympic curling and the private cloud are a lot alike. Don’t believe us? Take a look.
Both are safe and secure.
Let’s be honest: curling clearly presents the least amount of danger and lowest risk for injury at the Winter Olympics. Skiing and snowboarding? We’ve seen our fair share of wipeouts this year. Bobsled, luge and skeleton? Those are terrifying enough just as a spectator. Even figure skating poses a risk when skaters are leaping and twizzling left and right.
But curling? Extremely safe. Athletes can be fairly certain – whether they are curling or sweeping – that they will come out of the event unscathed.
Effectively managing liquidity and reporting within investment portfolios has been a struggle for fund of funds, institutional investors, pensions and endowments. No manager wants to in a position where their investor liquidity does not match portfolio liquidity but at the same time firms are trying to offer investors more frequent liquidity options as a competitive edge. In some case, investors are even asking for no liquidity limits.
To adapt to the changing liquidity risk landscape, firms are selecting portfolio management systems from companies like Ledgex Systems. Recently, Ledgex released the next generation of its portfolio management platform that delivers new liquidity management and manager research modules. These new tools give firms real-time visibility into their existing and proposed portfolio liquidity options while providing the research and analytics that support the manager selection process.
The Ledgex Liquidity module provides an advanced liquidity modeling utility and reporting engine, which can generate all available options for accessing assets given certain conditions by processing each tranche and their respective trade characteristics with a manager’s liquidity terms. Ledgex can model 90% of the manager liquidity terms used in the industry.
In honor of Valentine’s Day tomorrow, we are continuing our tradition of spreading the love to those who need it the most.
Categorized under: Trends We're Seeing
Managing technology at a hedge fund can be complex and time consuming, but not when you’re on the Eze Private Cloud. Adding new investment applications is a cinch, IT costs are predictable and security is robust.
Watch our new video to see what it feels like to be on the Eze Private Cloud:
Investment risk plays an important role in the life of a hedge fund manager, but technology risk should not. When it comes to your firm’s technology systems and operations, you want things to run efficiently, not add more stress to your already crowded plate.
Mitigating technology risk is a critical step to ensuring your hedge fund operates smoothly and successfully. Following are a few areas to keep in mind as you evaluate your firm’s technology risk:
Layers of Redundancy
One way to reduce your firm’s technology risk is to add layers of redundancy throughout your infrastructure. Whether you’re utilizing a cloud infrastructure or an on-premise environment, your servers, networking and telecomm lines should feature N+1 availability, a configuration in which multiple components have at least one independent backup component to ensure system functionality continues in the event of a failure.
Notice anything different? That’s right, your favorite hedge fund technology blog got a facelift, and we didn’t stop there -- we overhauled our corporate website too. Our goal with the overhaul was to make it even easier for visitors to get the valuable information they expect from the industry’s technology leader (us!). We hope you like it.
Now on to today’s hot topic. The U.S. Securities and Exchange Commission (SEC), at a recent industry event, said that they plan to examine the cybersecurity policies and procedures asset managers have in place to prevent and detect cyber attacks.
Specifically, according to Reuters, SEC national associate director Jane Jarcho said, “We will be looking to see what policies are in place to prevent, detect and respond to cyber attacks [and] we will be looking at policies on IT training, vendor access and vendor due diligence, and what information you have on any vendors."
Some have indicated that the SEC cybersecurity exams could be coming by late-September 2014. In many cases they will be conducted as part of the SEC's routine examinations of investment companies, however, Jarcho advised that inquiries could be done as separate exams.