Apex Group wins Best administrator – reporting/regulatory services at HFM European Service Awards 2020
With over 2000 employees servicing clients locally in Europe, the Apex group has expanded its local presence significantly over the years. With client services teams in the key jurisdictions, Channel Islands, Luxembourg, Ireland, United Kingdom, Switzerland, Malta, Isle of Man, Bulgaria and the Netherlands. With its extensive global footprint of over 40 offices worldwide and 3,000 employees, Apex maintains its focus on providing clients with the complete solution, locally.
A Time to Reflect
As we adjust to life under COVID-19 lock down and the new reality of working from home, it provides us with the opportunity to reflect more so, on the evolution of the Hedge Fund industry. Undoubtedly, the influx of new regulation has been the most prominent trend impacting our clients and industry in the last decade.
Pre Madoff, the Hedge Fund industry was often referred to as the “Wild West” and generally considered unregulated. The Madoff, other financial scandals of the early 2000s and the global financial crisis of 2008, were the main catalyst of the avalanche of regulation that followed.
In 2011, the European Commission introduced one of the most significant pieces of regulation in the form of the Alternative Investment Funds Managers Directive (“AIFMD”). The overarching objective was to create a comprehensive and secure framework for the supervisor and oversight of AIMs in Europe. These regulations were designed to protect investors, to reduce systemic risk and strengthen the single market via a marketing passport.
In an attempt to better understand the complexities of Hedge Fund product offerings and to gain the level of transparency that exists in the traditional fund space, in 2018 regulators imposed the secondary iteration of the Markets in Financial Instruments Directive (“MiFiD”), enhancing trading and transparency reporting requirements and product governance on Investment Managers.
2018 continued to be a landmark year for new regulation in the sector. Form PF, Form Adv, regulation on short selling and OTCs to name but a few, further addressed this need for transparency, requiring Investment Managers to provide regulators and governing bodies with detailed information on the assets they manage. Coupled with governments’ and tax authorities’ push for a standard and technical solution for the exchange of information led to further reporting obligations, under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (“CRS”).
Anti-money laundering (“AML”) and Financial Crime prevention remains high on the agenda of regulators across the financial services sector. The 5th AML Directive came into force in the EU in June 2018 and the Cayman Islands, one of the major offshore jurisdictions has moved to coordinate their AML regulations. The jurisdiction has now implemented a requirement under the Mutual Funds law to appoint individuals to serve as Money Laundering Reporting Officer, Deputy Money Laundering Reporting Officer and Anti-Money Laundering Compliance Officers.
The constant appetite for big data and transparency has placed added reporting pressures and burden on Investment Managers which has resulted in a significant increase to their cost of compliance. Data Protection and Cyber-security have been major concerns for all stakeholders across the financial services ecosystem, including the Hedge Fund industry. General Data Protection Regulation’s (“GDPR”) introduction in May 2018 was a landmark moment in data privacy law within the EU and gave the control back to the data owners. Firms continue to invest heavily in cyber security, as cyber threats become more sophisticated.
As a result of this tidal wave of regulation sweeping over the market, many Investment Managers and their Boards have opted to outsource these reporting requirements to their fund administrators. Investment Managers have also turned to technology to help them navigate through the ever changing and evolving regulatory and reporting environments. This has prompted a growth of “RegTech” software solutions to the market, which is a trend we see continuing.
In present day 2020, regulators and government bodies are seeking to further regulate Hedge Funds, Investment Managers and continue their pursuit for large amounts of data. AIFMD 2 amendments were agreed in August 2019 and will be fully transposed by August 2021.The CSDR Penalties Regime is expected to go live on the 1st February 2021 and will directly impact investment managers and their clients. Other notable additions have been the Ultimate Beneficial Owner and the pending DAC 6 cross-border tax arrangements initiatives. The spotlight on ESG reporting and investing remains a core objective of Hedge Funds, Investment Managers and company Boards
When we look back on the last decade, from a regulatory, compliance and reporting perspective, one contributing factor that is evident, is the requirement for clean, accurate, and timely data. We are delighted to have been named the Best Administrator – reporting and regulatory services at 2020 HFM European Hedge Fund Services Awards. The award highlights the breadth of knowledge and expertise that exists across the Group and our ability to manage our clients’ data efficiently, in order to deliver and report in an ever changing and challenging regulatory environment. This has added tremendous value to our clients as it allows them to focus on their core competencies of generating alpha in this highly volatile market.
Written by David Barry, Global Head of Hedge Fund Product
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