BNY Mellon's Pershing Unit Releases New Whitepaper Focusing on Outsourcing Solutions for Hedge Funds
October 05 2009 - 9:00AM
PR Newswire (US)
JERSEY CITY, N.J., Oct. 5 /PRNewswire-FirstCall/ -- Pershing LLC, a
BNY Mellon company, and Aite Group LLC have published a new
whitepaper that examines critical hedge fund operations and
provides managers with best practices and a systematic framework
for helping them select and effectively manage relationships with
third-party outsourcing solution providers. The whitepaper
entitled, Fueling Growth: Outsourcing Solutions for Hedge Funds, is
available through Pershing Prime Services and BNY Mellon
Alternative Investment Services. According to the report, an
increase in client redemption requests is threatening the viability
of even the most well-managed hedge funds. Many fund managers are
taking action by reassessing their overall investment strategies
and evaluating their relationships with key service providers, such
as those with prime brokers, fund administrators and information
technology companies. Hedge funds must consider a multitude of
factors to help make an informed decision on establishing an
outsourced vendor relationship, including cost, evaluating
disparate information, balancing internal resources, prioritizing
short- and long-term business goals and establishing appropriate
relationship metrics. Key findings from the whitepaper include: --
Choosing the Proper Outsourcing Model - A majority of hedge funds
have favored the approach of implementing a hybrid outsourcing
model because it provides them with operational flexibility to meet
short-term goals using third-party service providers for some key
functions, while allowing the firm to develop internal capabilities
for long-term expansion; -- Smaller Hedge Funds Challenged by
Resource Restrictions - The hedge fund market is dominated by
small- and mid-size funds, many of whom lack expertise in specific
functions and have limited resources. These funds often opt to
outsource a significant portion of their functions to third-party
solution providers and to their prime broker. Smaller hedge funds
should also consider outsourcing essential business functions
including legal, accounting, administrative and back-office-related
tasks, such as clearing and trade reconciliations; -- The Role of
the Prime Broker - Most leading prime brokers have seasoned
internal consulting teams who have relationships with a broad array
of service providers--such as law firms, real estate agencies,
recruiting firms and software vendors--and can facilitate
introductions with various vendors who can potentially meet the
needs of the hedge fund. Hedge funds should consider seeking out
their prime broker's counsel before establishing a new relationship
with a third-party firm; and -- Consider Disaster and Recovery
Planning in Vendor Selection - The stability of a third-party
solution provider should be an important consideration for hedge
funds as it relates to their disaster and recovery planning. As
hedge funds rely more heavily on outsourced services, they should
execute proper due diligence on a vendor's financial viability,
technology capabilities, contingency around business continuity and
disaster recovery, management and customer service. To help hedge
fund managers better understand business continuity and disaster
recovery planning processes and principles, Pershing Prime
Services, in collaboration with Eze Castle Integration and its
colleagues across BNY Mellon, has developed a guidebook entitled,
Establishing Business Continuity and Disaster Recovery Plans: A
Hedge Fund Manager's Guide. The guidebook provides fund managers
with strategic insights into creating thorough plans that may help
minimize financial loss and the negative effects of downtime on
their firm's strategic plans and operations. Craig Messinger,
managing director of Pershing Prime Services, said, "It is
important for hedge funds to develop a thoughtful, long-term
outsourcing strategy to ensure that its needs for support during
various stages of the fund's lifecycle are closely aligned with its
goals and objectives to serve investors well. Employing this type
of approach will enable hedge fund managers to focus on generating
profitable returns for their clients and help them grow their
businesses in a more productive manner." Sang Lee, managing partner
at Aite Group LLC, added, "Substantial benefits exist for hedge
funds that develop strong outsourcing relationships across their
businesses. However, selecting the right vendor relationship is a
complex process. It is critical that fund managers develop a
thorough process to understand their own needs as well as evaluate
vendor relationships for cultural fit and long-term continuity."
Pershing's parent company, BNY Mellon, also provides a wide range
of administration services to hedge funds, funds of hedge funds and
private equity assets through BNY Mellon Alternative Investment
Services, one of the world's leading providers in this market
segment with more than $200 billion in hedge fund assets under
administration. In addition to hedge fund administration, BNY
Mellon offers a wide range of accounting, cash management,
collateral management, custody, asset management and wealth
management services to the hedge fund industry. Pershing Prime
Services delivers an unconflicted, comprehensive suite of global
prime brokerage solutions, including extensive access to securities
lending, dedicated client service, robust technology and reporting
tools, worldwide execution and order management capabilities, a
broad array of cash management products and the integrated platform
of BNY Mellon. Pershing Prime Services is a service of Pershing
LLC. A copy of Pershing's new whitepaper and guidebook, and
additional information regarding Pershing Prime Services'
capabilities and solutions, can be found by visiting
http://www.pershingprimeservices.com/. Pershing LLC (member
FINRA/NYSE/SIPC) is a leading global provider of financial business
solutions to more than 1,150 institutional and retail financial
organizations and independent registered investment advisors who
collectively represent approximately five million active investors.
Located in 20 offices worldwide, Pershing and its affiliates are
committed to delivering dependable operational support, robust
trading services, flexible technology, an expansive array of
investment solutions, practice management support and service
excellence. Pershing is a member of every major U.S. securities
exchange and its international affiliates are members of the
Deutsche Borse, the Irish Stock Exchange and the London Stock
Exchange. Pershing LLC is a BNY Mellon company. Additional
information is available at http://www.pershing.com/. BNY Mellon is
the corporate brand of The Bank of New York Mellon Corporation. BNY
Mellon is a global financial services company focused on helping
clients manage and service their financial assets, operating in 34
countries and serving more than 100 markets. The company is a
leading provider of financial services for institutions,
corporations and high-net-worth individuals, providing superior
asset management and wealth management, asset servicing, issuer
services, clearing services and treasury services through a
worldwide client-focused team. It has $20.7 trillion in assets
under custody and administration, $926 billion in assets under
management, services $11.8 trillion in outstanding debt and
processes global payments averaging $1.8 trillion per day.
Additional information is available at http://www.bnymellon.com/.
DATASOURCE: BNY Mellon CONTACT: Michael Geller of BNY Mellon,
+1-201-413-4179, Web Site: http://www.bnymellon.com/
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