IMS Consulting, the UK's largest independent financial services regulation and compliance consultancy, has launched a new verification service for hedge funds.
This service is to help hedge funds understand and meet the Hedge Fund Standards Board (HFSB) standards of best practice. The service is pioneered at a time of increased scrutiny for hedge funds and an industry drive for transparency. Many investor groups are now strictly enforcing manager adherence to these standards.
The HFSB was established to continue the work started by the Hedge Fund Working Group. This group consisting of 14 of the largest UK hedge fund managers published a report on best practice standards in January 2008.
Ten more hedge fund managers have recently signed up to the 75 HSFB standards, which cover areas such as risk and performance management, valuation and counterparty disclosure.
The HFSB recently told the investor community that they should expect non-signatories to be the exception in future. In this context, an increasing number of managers are now looking at conformity with the standards as a critical part of their appeal to new and existing investors.
With disclosure the HFSB focus, managers conform to the standards by either complying fully or explaining why they do not.
IMS Consulting will work with firms to explain the practical implications of meeting the standards. They will show firms how to prove they meet the standards. In addition, IMS will help the firm put in place any extra controls necessary to ensure compliance.
This verification service adds to IMS's expertise in FSA requirements such as the Individual Capital Adequacy Assessment Process (ICAAP). IMS were part of the Working Group that drafted the Alternative Investment Management Association's ICAAP Guidance Note.
FSA rules require investment firms to have an ICAAP in place and IMS can provide independent assurance to managers that they reach all required industry standards and FSA requirements.
Chris Rexworthy, Director of Risk Consulting at IMS Consulting commented: "Hedge Fund managers now see conformity with standards as essential rather than optional. This fast, focused verification service assists firms with a proven, practical approach to compliance and risk management. It enables firms to identify and understand the standards, and therefore demonstrate the high level of responsibility hedge funds display at a time when hedge fund managers are increasingly in the spotlight. Our verification service makes the decision as to whether to comply or explain much easier. We also ensure our clients have quantified risks in tune with Internal Capital Adequacy requirements."