Hedge Fund Standards Gather Momentum

With a further 10 Hedge Fund Managers now having signed up to the Hedge Fund Standard Board’s Standards of Best Practice, and the HFSB telling the Investor Community that they should expect Non-Signatories to be the exception, an increasing number of managers are now looking at conformity with the standards as an essential part of their appeal to both new and existing investors.

Conformity with the standards is through a ‘comply or explain regime’ the foundation of which is disclosure. A manager who becomes a signatory to the standards ‘conforms’ if it either complies with the standard or explains why it does not. By adopting this approach the HFSB’s standards do not impose a straight jacket on firms to adopt a defined set of procedures or meet onerous rules. Instead the standards provide a framework through which the manager can demonstrate market discipline to potential investors when they are considering whether to invest.

The standards cover:

• Fund & Manager governance;
• Valuation & performance;
• Operational controls and processes;
• Disclosures & Reporting;

and set new benchmarks for firms’ management to achieve.

IMS has developed an efficient and effective verification service to assist firms by using its proven and market leading practical approach to compliance and risk management, to enable firms to identify and understand the standards, and make the important decision as to whether to comply or explain. Furthermore, IMS is able to adapt the verification service to include compliance with other industry codes, such as the President’s working group, where it would help the firm to do so.

IMS has adopted a proven three point process of:

1. Testing compliance with the 75 standards and ;
2. Achieving compliance by helping to implement new controls or processes when needed;
3. Verify & Report to help firms provide assurance to investors that the accepted standards are being met.

IMS has 13 years of experience working in and with the Alternative Asset Management Industry and our consultants combine several hundreds of years. IMS is widely regarded as the leader in our field and we are able to provide the level of service, and quality of reporting, managers need to attract, and retain, investors.

To discuss how IMS can help your firm understand and meet the HFSB standards please contact Chris Rexworthy, Jon Wilson or Stephen Burke.