SBAI » Open Protocol

Bringing managers and investors together to set standards for the alternative investment industry

Open Protocol

Better risk disclosure by investment funds has been a priority for both investors and regulators in recent years. Investors are increasingly seeking to aggregate risk information about their investments to improve overall portfolio risk management, while regulators have started to collect data to assess potential systemic risk concerns.

The Open Protocol (OP) and Insurance Open Protocol (IOP) templates address this by standardising the collection, collation and representation of risk information of alternative investment funds and other types of investment funds. This provides a uniform framework with consistent data inputs, standard calculation methodologies and regular and timely reporting. Where available, OP and IOP use commonly accepted standards and protocols.

Rationale for Standardised Risk Reporting

  • Investors can easily harness the standardised data and aggregate exposures to monitor and manage risk at portfolio level, and make better investment decisions.
  • Managers can streamline their reporting by producing one generally accepted standard risk report rather than data for many disparate templates, thereby ensuring that all clients are treated equally.
  • OP framework helps produce various regulatory reporting templates (Form PF, AIFMD Annex 4 etc.).

Key Characteristics

  • OP covers exposure information on all major asset classes that hedge funds and other (alternative) instrument funds may trade as well as counterparty risk and investor breakdown.
  • IOP covers insurance exposures and risk information applicable to dedicated insurance strategies, as well as multi-strategy managers that have some exposure to insurance.
  • It is structured in 3 Grades such that managers can provide the information at different levels of granularity (depending on their preference/comfort level).
  • A range of third party service providers produce Open Protocol Reports. For more information, please click here.

The Open Protocol (OP) template and manual were first launched in August 2011. An updated version was released in August 2016 following the addition of Real Estate to GICS. The Insurance Open Protocol (IOP) template and manual were released in June 2017.

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