Date: 07 May 2019

Tags: case study

Hedge Fund - Derivatives Reconciliation

A London based hedge fund specialising in European equity began trading in 2008 and had grown their AUM to over £2bn by 2014. A three man operations team were utilising a well-known portfolio accounting system (PMS) and had developed a series of Excel spreadsheets for validating market value and P&L data as well as conducting positions and cash balance reconciliation with the prime brokers.

Reconciliation was recognised as a weakness in the firm’s operational processes. The manual effort required was disproportionate to the quality of the reconciliation obtained. The Excel approach failed to satisfy the operational due diligence commissioned by prospective investors. The solution was fragile and required significant maintenance as volumes increased or as new funds or prime broker relationships were added.

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Tom has a background in investment operations working for both The Bank of New York and Cazenove Capital Management in London. He previously had a career in motorsport as a driver, instructor and operations manager both in the UK and North America. Tom holds a BSc (Hons.) in Motorsport Management from the University of Wales, the Executive MBA from Oxford University's Saïd Business School and the Investment Management Certificate.

Key Points.

  • $2bn AUM Hedge Fund
  • ETD & OTC Derivatives
  • Linedata Global Hedge PMS
  • Trades, Positions,Cash Balances, TotalEquity Reconciliation

White Papers.

  • Emir Reconciliation Overview
  • Key Features of a Successful System Implementation
  • Servicing Hedge Funds - HFM Week Article
  • Basic Securities Reconciliation For The Buy Side
  • Data Aggregation For Asset Reconciliation
  • The Direction of Reconciliation Systems
  • Total Equity Reconciliation for Derivatives
  • Reconciliation Best Practice
  • The Role of Reconciliation in Managing Operational Risk
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