Following the publication of the new agreed template for the global collection of hedge fund data by the International Organisation of Securities Commissions’ (IOSCO) Technical Committee in February, the regulator has confirmed that these funds will have to start providing this data to national regulators at the end of September. Aimed at better monitoring risk in this traditionally opaque market, the new regulatory reports will therefore require hedge funds to provide 11 new sets of data.
Greg Tanzer, IOSCO secretary general, confirmed the move during a conference earlier this week: “The next step for us is going to be is coordinating a survey of hedge funds using this template so we can try to get a global picture for the first time on the state of the hedge funds industry and then analyse that data from a systemic perspective.”
The purpose of providing the industry with an agreed template is to allow for the standardised reporting of “consistent and comparable” data sets around these funds’ trading activities and counterparty interactions, according to IOSCO. The template was developed by the Task Force on Unregulated Entities, following requests from the Financial Stability Board (FSB) as well as from IOSCO members.
The data template incorporates both supervisory and systemic data and builds on the data collection recommendations set out in IOSCO’s final report on Hedge Fund Oversight. The data categories that now must be provided to regulators comprise: general manager and advisor information; performance and investor information related to covered funds; assets under management; gross and net product exposure and asset class concentration; gross and net geographic exposure; trading and turnover issues; asset and liability issues; borrowing data; risk issues; credit counterparty exposure; and a number of other data issues such as complexity and concentration.
The data will then be used to track risk exposure across the market, although IOSCO hasn’t fully elaborated on the process via which it will provide the data back to the market. Tanzer noted that the September data collection process would likely lead to some tweaking of the data template. National regulators will be tasked with collection of the templates and passing them on to IOSCO.
This is likely a precursor to much stricter regulation of the hedge fund sector on a national level, as regulators are keen for these funds to register and submit data, such as that required by IOSCO, on a regular basis. Regardless of whether all of these data sets become mandatory for reporting purposes in the long term, the September deadline indicates the hedge fund community is poised for change and this will be centred on meeting these new data requirements.