Industry overhauls technology and processes to restore confidence and win back clients. Battered but not beaten, many hedge funds will make a comeback from the financial turmoil. But analysts say they will need to improve the technology and processes they use to make investors feel secure.
Cautious institutional investors are demanding that hedge funds use multiple prime brokers with the relevant aggregation technology, real-time risk management and stress tests, and provide transparency and accounting reports for clients. However, for many funds, the extra spending required comes at a time when net asset values, fees and revenues are falling. Keith Bliss, senior vice-president of sales and marketing at agency brokerage Cuttone & Company, said: “Any hedge fund that wants institutional money will have to have systems for trading across multiple accounts with real-time risk management functionality. It is part of the institution’s RFP [request for proposal], the first page of the checklist.”
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