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Hedge Funds: Regulatory, Risk and Compliance

16th-17th June 2016, London, UK
23rd-24th June 2016, New York, US

  PR ESENTED  IN ASSOCIATION WITH

PRESENTED IN ASSOCIATION WITH

Regulatory developments on both sides of the Atlantic such as Dodd-Frank in the US, and the AIFMD in the EU, have forced Hedge Funds and Alternative Investment Funds to re-think future investment, compliance and administration strategies

Conference Media Partners

Conference Program

This two day intermediate to advanced level programme will provide delegates with comprehensive training in the latest regulatory, risk, and compliance issues affecting the hedge fund industry around the world today.  Delegates will be instructed on the latest regulatory developments affecting hedge funds in the European Union and the United States, as well as globally. The course will provide a unique perspective on the latest trends and opportunities affecting hedge funds, as well as providing insights into hedge fund governance, third party administration practices, and effective hedge fund compliance program strategies.

Day 1: Sessions

SESSION 1: Hedge Fund Regulatory Overview and Update

• EU Regulatory Framework (AIFMD; EMIR; PRIIPs, UCITS V) and US Regulatory Framework (SEC Registration, Dodd-Frank, FATCA).

• Regulatory Update (Latest Developments, Costs of Doing Business, Barriers to Entry, New Regulatory and Compliance Opportunities).

• Hedge fund investment outlook, trends, and opportunities.

SESSION 2: Hedge Funds, MiFID II and MiFIR

• Overview of Key MiFID II obligations and concepts (conduct of business obligations, transparency and investor protection, third country firms).

• In-scope OTC derivatives and commodities markets and commodity derivatives position limits.

• Key trading and reporting issues for Hedge Fund Managers (different reporting templates, expanded instruments, identifiers, reporting and trading algorithms).

SESSION 3: Hedge Funds, FATCA and the OECD CRS

• Definitions, the Three Pillars of FATCA (Classification, Reporting, Withholding) and Passthru Payments.

• FATCA due diligence for Hedge Funds under Model 1 IGA, Model 2 IGA, and FFI Agreements.

• Assessing Hedge Fund compliance risks and costs.

• FATCA civil and criminal penalties.

• Analysing and comparing the OECD CRS Standard for Automatic Exchange of Financial Account Information (Model Competent Authority Agreement) (Common Reporting and Due Diligence Standard).

SESSION 4: Hedge Funds, Business Continuity Planning and Disaster Recovery Plans

• Building a Disaster Recovery Plan (objectives, capital costs, underlying business requirements,  

• The decision to outsource Disaster Recovery Plan Development and key considerations.

• Evaluating technology solutions for data security and protection.

• Key considerations in developing effective Business Continuity Plans.

Day 2: Workshops

WORKSHOP 1: Hedge Fund Governance I

• How to define Hedge Fund Governance.

• Hedge Fund Governance Principles: Legal v. Best Practice.

• Hedge Fund Quality Governance, Openness, and Transparency Best Practices.

• Alignment of Interests, Fee Pressures, Agency Risk, and Conflicts of Interest.

WORKSHOP 2: Hedge Fund Governance II

• Hedge Fund Investor Fee Structures – Alpha v. Beta Gains, New Fee Structuring Practices.

• Managerial High Pay Performance Sensitivity.

• Evaluating the Effectiveness of Hedge Fund Boards.

• Corporate Governance, Ethics, and the Hedge Fund Board.

WORKSHOP 3: Developing and Implementing an Effective Compliance Program

• Developing an effective Compliance Program (books and records; business continuity; compliance calendars; codes of conduct; confidential information; conflicts of interest; accounting practices; independent and fair valuations; problematic valuations such as derivatives; leveraging technology) and Compliance Outsourcing Options.

• Effective Risk Prevention and Remedy Plans and strategies to anticipate future compliance and hazard risks.

• Effective Employee Misconduct Strategies (use or misuse of property).

WORKSHOP 4: Hedge Fund Third Party Administration

• Selection of Third Party Fund Administrators (due diligence, cost-benefit analysis, cost advantages, risk and liability, perception of independence, administrator agreements, procedures manuals, and the delegation of core and non-core functions, 'NAV Lite' risks).

• Record keeping requirements, compliance rules, compliance manuals, annual reviews.

• Third party fund administration technology and operational offerings and strategic partnerships.

• Third Party Shadowing of Third Party Fund Administrators.


London Programme

New York Programme

Presented by Jon Aikman, Managing Lawyer of J.S. Aikman Corporation and author of ‘When Prime Brokers Fail’ and ‘Hedge Fund Law and Finance: Regulation, Compliance, and Risk Management’
Presented by Kevin Walsh, Chief Operating Officer of TMF Custom House Global Fund Services, responsible for oversight of its eight fund service locations in Europe, Asia and North America
Presented by Simon Eyre, Director of Service at Eze Castle Integration (London), with over 15 years of experience within the IT industry
Presented by Rodrigo Zepeda the Co-Founder of Storm-7 Consulting and the author of ‘Hedge Funds, High Risks and Headaches: Negotiating and Documenting Hedge Fund Derivatives’

Key Benefits

  • Advanced knowledge and understanding of the latest regulation, compliance, and risk management issues affecting hedge funds
  • Key insights into the latest issues affecting third party administration, and how to implement effective compliance programs
  • Pre-course questionnaire to identify delegate's key course objectives
  • Lenovo 8" Yoga Tablet pre-loaded with course presentations and documentation to take-away
  • Comprehensive course documentation
  • Post-course follow-up to guarantee all key course objectives have been met

Course Suitable For

  • Alternative Investment Managers
  • Buy-Side Organisations
  • Chief Executives
  • Chief Financial Officers
  • Chief Risk Officers
  • Compliance Officers/Directors
  • Family Offices
  • General Legal Counsel
  • General Managers
  • Hedge Fund Officers
  • Hedge Fund Managers
  • Investment Fund Managers
  • Private Equity Fund Managers

Why should I attend this Conference?

In recent times hedge funds have been grappling with a multitude of legal, regulatory, and financial issues that have significantly impacted the hedge fund industry. A recent survey by Deutsche Bank showed that two thirds of hedge fund investors believed that hedge fund returns fell below expectations in 2014, whilst 2014 also saw the number of hedge fund failures rise to financial crash levels (2008, 1471 liquidations; 2009, 1,023 liquidations). Such failures included well-established funds such as the Tudor Tensor Fund, Anderson Global Macro, and Lonestar Capital. A June 2015 Hedge Fund Survey carried out by the Financial Conduct Authority found that "by far, the largest proportion of total leverage used by hedge funds in the UK is acquired using derivatives" (FCA 2015, p.5). The survey showed that over-the-counter (OTC) derivatives execution seemed to dominate, but that 69% in volume of OTC derivative trades were centrally cleared by Central Counterparties (CCPs) (FCA 2015, p.18). It was also highlighted that this volume was accounted for mainly by the Top 10 funds trading derivatives, with the vast majority of funds transacting derivatives on a bilateral OTC basis, but with 22% of funds surveyed unsure of how much collateral had actually been re-hypothecated (FCA 2015, pp.18, 27). The increased use of OTC derivatives in hedge fund investment, trading, and hedging strategies will not only expose them to higher financial portfolio risk, but also to regulatory operational burdens under the European Market Infrastructure Regulation (EMIR), the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), and the updated Markets in Financial Instruments Directive (MiFID II) that takes effect from 3 January 2017. In addition to this, Professors from New York University, Yale School of Management, Isenberg School of Management, and The Paul Merage School of Business, carried out an empirical study to estimate operational risk for hedge funds using data from a sample of 2,299 funds (Brown et al., 2008). It was seen that hedge funds "operational risk, as measured by past legal or regulatory problems incurred by investment advisers or fund managers, is strongly related to ADV variables such as conflict of interest, ownership, and leverage" (Brown et al., 2008, p.3). It was concluded that hedge fund operational risk was more significant than financial risk in explaining fund failure, and that "funds with high degrees of operational risk are more subject to failure from excessive financial risk" (Brown et al., 2008, p.19). The flaw that hedge fund compliance desks may currently have is that they have built a single internal view of new global hedge fund regulatory frameworks and hedge fund governance practices.  Consequently, this Hedge Funds: Regulatory, Risk and Compliance conference aims to provide delegates with views and insights from Expert Trainers that have knowledge and experience with a range of external hedge fund compliance frameworks. Delegates will be updated with the latest and most relevant regulatory (MiFID II, MiFIR, FATCA, OECD CRS, EMIR, AIFMD) issues affecting hedge funds, as well as insights into how to optimise and leverage regulatory compliance strategies. Delegates can have their Business Continuity and Disaster Recovery Plans evaluated by an EzeCastle Integration expert to ensure they are sufficiently optimised, in order to minimise financial loss, and the negative effects of downtime in the face of unexpected business disruptions. They can discuss existing hedge fund compliance and governance practices with a hedge fund lawyer who has experienced first-hand a range of hedge fund compliance frameworks. Indeed implementing or refining transparent governance best practices can help to stem the effects of a potential "run on the bank" by hedge fund investors demanding redemptions. Delegates will be able to discuss in depth how global regulations are impacting risk management practices, and the conference will allow them to review third party administration offerings, or to re-evaluate existing third party administration frameworks.

Hedge fund compliance desks need to ensure that they are able to seamlessly address all legal, regulatory, operational, and technological risks within a holistic compliance framework. Can you say with 100% absolute certainty that your existing hedge fund compliance framework has done this?

References

Brown, S. Goetzmann, W., Liang, B. and Schwarz, C. (2009). Estimating Operational Risk for Hedge Funds The ω-Score, Financial Analysts Journal, 65(1), p.1-11 (online).

FCA (2015), Hedge Fund Survey (June 2015), Financial Conduct Authority, (Pub Ref: 005043), pp.1-31 (online).