HFSB Publishes Results of Working Group on Administrator Transparency Reporting
In the wake of the financial crisis in 2008 and events such as the Madoff scandal and Lehman Brothers collapse, an increasing number of administrators are providing ATRs to hedge fund investors. ATRs provide independent confirmation of fund assets and liabilities by the administrator, as well as allow investors to evaluate the fund’s pricing sources and assess the diversification and quality of counterparties.
Given the increasing importance and prevalence of ATRs in the hedge fund industry, the HFSB has developed the industry’s first-ever standard ATR data structure, in an effort to improve the comparability and understanding of these documents for hedge fund investors.
The standardised ATR data structure was developed by a working group put together by the HFSB and consisting of more than 15 hedge fund managers, investors and administrators, following the publication of the HFSB Administrator Transparency Reporting Memo in May 2015.
The working group developed a tiered reporting framework to include basic, detailed and optional information, and to focus on areas such as existence confirmation, counterparty exposure reporting, pricing source verification and fair value hierarchy.
Christophe Juhem, Head of Operational & Legal Due Diligence at Unigestion, and a member of the working group said: “Administrators currently provide data at varying levels of granularity and sometimes in differing data structures. As this data is very important to investors, the template will help improve the quality and consistency of administrator transparency reports as well as facilitate ongoing monitoring of their investments by investors.”
Dame Amelia Fawcett, Chair of the HFSB, said: “Our work on the ATR reflects the HFSB’s ability to bring together investors, managers and other important parties to establish and implement best practices across the hedge fund industry."
As a Toolbox “item”, the standard ATR data structure provides guidance and will not form part of the Hedge Fund Standards and the comply-or-explain approach. The HFSB Toolbox is designed to complement the HFSB’s standard-setting activities, providing additional guidance to managers, investors and fund directors on practical issues, such as fund governance, cyber security, etc.
