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Best Execution and Operational Performance
Operational Risks and Performance
The financial crisis has been synonymous with a transfer of a portion of investor risk towards the providers of investment and related services. The difficulties that third-party fund management has experienced in the areas of asset security, pricing and compliance with regulation, suggest that this shift in the responsibilities of those involved in fund management will have a significant impact on the profit and loss accounts not only of the fund management firms but also of all the service providers who are associated with them. Against this backdrop, this research programme aims to identify the operational risks parties to the fund management industry bear as a result of their practices and of regulations, assess the importance of these risks and their impact on the parties’ solvency and business models, and propose means of mitigating these risks.
MIFID
This paper is a call for the industry to seriously embrace a reflexion on how the quality of service is and should be measured in order to adequately protect the end investor in a context where a deliberate fragmentation of supply might not be counter balanced by adequate measures.
TCA IN EUROPE: CURRENT & BEST PRACTICES
This research reviews the conditions in which buy-side firms (traditional and alternative) are currently monitoring transaction costs and investigates the various issues related to transaction cost analysis in the context of the Markets in Financial Instruments Directive due to be enforced in November 2007, which contains an important provision related to Best Execution.
MITIGATING HEDGE FUNDS OPERATIONAL RISKS
This study shows that, when accompanied by appropriate risk monitoring and adequate structuring of the relationship with the hedge fund manager, managed accounts today represent a very efficient approach to mitigating operational risks, especially when the size of the investments does not allow for a dedicated operational due diligence and risk monitoring team to be set up.
CACEIS "RISK AND REGULATION IN THE EUROPEAN FUND MANAGEMENT INDUSTRY" RESEARCH CHAIR
Information about the CACEIS "Risk and Regulation in the European Fund Management Industry" Research Chair.