SOLUTIONS FOR HEDGE FUNDS
The regulatory landscape has changed dramatically since the financial crisis, causing hedge funds to adapt as investors require greater transparency. The onus for aggregating, analyzing and documenting portfolio details now falls on hedge funds, often at a significant expense and drain on resources. To add to the complexity of the task, regulations and reporting requirements vary by client type and jurisdiction.
With global analytics expertise, an industry-leading risk engine, and access to daily and historical market data, MSCI is strongly positioned to provide hedge funds the tools needed to meet the new transparency and reporting demands in today's marketplace.
The Basel Committee on Banking Supervision continues to enhance and strengthen the banking regulatory framework (BASEL III) with new reform measures aimed at calculating capital requirements for banks’ equity investments in funds.
In order to receive new and maintain existing investments, hedge funds may need to support their banking investors in satisfying this regulatory requirement.
MSCI's reporting and analytics solutions include data and analytics that are designed to enable hedge fund investors to calculate the capital charge using the look-through approach, which helps to lower their capital charges without exposing a fund’s investment strategy.
Under the Dodd-Frank Act, private fund advisors with at least $150 million in private funds are required to report regulatory assets under management via the Security and Exchange Commission's Form-PF. For hedge funds, the reporting process can be time consuming and complex.
MSCI seeks to help streamline Form-PF reporting with solutions designed specifically for hedge funds. The Form-PF packages are designed to help hedge funds accurately report information related to exposure, liquidity, open positions, value at risk, stress tests and derivatives information. MSCI offers the following set of regulatory reports:
- FORM PF monthly report (xml)
- FORM PF diagnostic report (xls)
- FORM PF Aggregate monthly report (xml)
- FORM PF Aggregate diagnostic report (xls)
OPEN PROTOCOL (OPERA)
Open Protocol (OPERA)
Open Protocol (OPERA) reporting standardizes how hedge funds collect, collate and report risk information to investors and regulators. As more hedge funds and investors move to this template-based format, it minimizes the reporting burden on hedge funds, while making it easier for investors to aggregate and analyze their exposures in a consistent manner.
Using OPERA, hedge funds can provide three different levels of information depending on their preference. Grade 1 is available to all investors and includes Exposures, Risk Measures and Counterparty Credit Risk. Grades 2 and 3 are optional and offer more granularity in the results.
MSCI's OPERA Reporting Package is designed to streamline reporting for hedge fund managers by populating all of the asset class exposure sections, risk sensitivities and counterparty exposures. The available set of regulatory reports are:
- OPERA Report (xls)
- OPERA Diagnostic (xls)
Under Solvency II, European insurers must provide transparency on the cost of capital related to underlying assets and demonstrate that they meet Solvency Capital Requirements (SCR).
Increasingly, hedge funds wanting to establish and maintain relationships with European insurers need to consider Solvency II compliance. MSCI's reporting package aims to facilitate reporting across a broad spectrum of asset classes, including alternatives.
The reporting package calculates Solvency II capital ratios using the standardized approach on position level data. It includes the following set of reports:
- SCR Dashboard (pdf)
- SCR Diagnostics (xls)
- Tripartite report (xls)