SS&C GlobeOp confirm they will launch CFTC reporting system for hedge funds
“Hedge fund managers need to report a lot of data to regulators nowadays including the CFTC and they will need assistance in doing so. We are looking at creating a front-end, web portal system to help managers report to the CFTC and other regulators similar to our Form PF solution. The system will be automated which will enable it to be more transparent and faster,” said Rahul Kanwar, the newly appointed head of SS&C GlobeOp in New York.
The CFTC and SEC agreed hedge funds executing interest rate swaps, OTC foreign currency options, commodity options, non-deliverable forwards in FX, cross-currency swaps, forward rate agreements, contracts for difference and total return swaps on underlying commodity interests, options to enter into swaps and forwards swaps, must register as Commodity Pool Operators (CPOs) with the CFTC and become National Futures Association (NFA) members in order to trade. Funds trading an insignificant number of swaps are exempt although the rules are extraterritorial and will impact non-US funds.
Affected managers will be subject to CFTC and NFA disclosure, reporting and recordkeeping requirements. They will be forced to submit details on AuM, leverage, counterparty exposures and trading positions. “In addition to legal counsel, the fund administrator is a natural choice to play a role in this process since much of the data is warehoused with the fund administrator,” said Kanwar.
“We have had requests from clients to launch a CFTC reporting system and we view this as a natural extension of our cloud based products. To the extent the regulators allow for electronic submission we will enable that as well,” he added.
There is still confusion about what the final rules will look like. The CFTC and SEC have only just agreed on the actual definition of a swap although this is still open to interpretation and legal wrangling. Furthermore, funds of funds are alarmed they may be ensnared by the provisions although some optimists suspect they too could be exempted.
The situation has been given added urgency because the rules are effective from December 31, 2012. However, the tight deadline does not faze Kanwar. “The regulatory uncertainty is a challenge but we have over 600 engineers that work for us and we are confident we can get the system out in good time. We don’t want to build a product very early only to find the CFTC changes a lot of the requirements,” he said.
SS&C launched a web application to help managers complete Form PF late last year. Kanwar said the CFTC registration app would leverage some of the Form PF platform’s technology.