Fund admins eying up Form PF investor disclosure opportunities
Fund administrators have expressed an interest in creating an “investor-friendly Form PF lite” for hedge fund managers to provide their clients.
“We have heard from some hedge fund clients that their investors want them to disclose their Form PF as part of the operational due diligence exercise. Some managers may find disclosing such information uncomfortable, and there is a possibility fund administrators such as ourselves could provide an investor-friendly Form PF, which could omit the most strategically sensitive or proprietary information. This could certainly alleviate managers’ concerns” said Vernon Barback, president and chief operating officer at GlobeOp in New York.
Custom House Fund Services also confirmed it could create investor-friendly Form PFs were its hedge fund clients to ask for such a service. “It is certainly something we would consider if we have requests. It could be a very good business opportunity for fund administrators,” said Dermot Butler, chairman of Custom House Fund Services in Dublin.
Form PF disclosure has inevitably pitted some investors against their managers. One institutional investor, speaking off record, expressed doubts managers would supply much, if any, Form PF data. He also criticised managers refusing to disclose Form PF data who cited confidentiality concerns. The investor said the information was 60 days old making it incredibly difficult to replicate.
Nevertheless, a shrewd investor could potentially backdate the trading information and carry-out copycat trading – although most participants acknowledged this was unlikely.
Barback said disclosure was all dependent on the manager. “A high-frequency trading hedge fund focused on listed equities might be more open to disclosing Form PF data as the positions are 60 days old and the investor cannot do anything with them. If the managers are focused on distressed credit or illiquid products, Form PF disclosure could be an issue,” he said.
Written by Charles Gubert