Firms Eye Hedgies, Collateral, Derivatives : Wall Street Letter

Sam AuxierThe major themes in 2009 for fund administrators and utilities are familiar ones--hedge fund servicing and derivatives processing will be the top issues service providers expect to help their clients solve. This year's plans, however, will be overshadowed by uncertainty, at least in the first half. "I think caution and fear are probably the words of the moment," said Sam Auxier, director in the regulatory and capital markets practice at Deloitte & Touche.

Derivatives processing has garnered more attention from regulators over the past year, particularly as major counterparties have failed. Hedge funds have taken hits over the past year as well, losing confidence in prime brokers and turning toward more established providers who will scramble to keep up with their demands. Efficient collateral management has emerged as a surprise focus; though always important, current events have illustrated why the function is necessary in fast-moving markets.

Hedge Funds To Expand Traditional, Outsourcing Services

One major change service providers are expecting this year: hedge funds that are more likely to contract traditional providers for administrative and custody functions. But, hedge funds are also expanding the types of services they request from traditional providers, which means in some cases providing non-traditional services, said Marina Lewin, managing director of alternative investment services at The Bank Of New York Mellon. In some cases, this will cause administrators to move into what is traditionally considered prime broker territory. "I think we will see a redefinition of the prime broker model, so the definition of what service providers are doing for alternative firms will continue to evolve," she ...

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Firms Eye Hedgies, Collateral, Derivatives

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