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2013 Business Expense Benchmark Survey
Chart 37: Compliance Spend by Category
Source: Citi Prime Finance. Total dataset examined (124 firms, $465 billion AUM)
$100M
$500M
$1.5B
$5B
$10B
>$10B
Software Management Co.
Compensation bps
24%
0%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10%
20%
38%
30%
6%
15%
Third Party Fund
Third Party Management Co.
49%
77%
82%
69%
94%
80%
5%
15%
8%
18%
5%
2%
26%
23%
21%
3
17.7
4.2
4.0
3.2
3.0
1.2
3.8
4.1
1.1
8.6
.11
.83
.04
3.24
.09
.59
.03
3.29
.15
.27
.58
2.25
.17
2.84
.06
.19
.98
Compliance Expense as BPs of AUM
PERCENT OF TOTAL COMPLIENCE EXPENSE
Compliance Related Hiring Ramps Up in
EMEA & APAC
Regional views on the importance of various
regulatory initiatives vary, as shown in Chart 38.
The greatest focus of effort and spend across all
functions for hedge funds based in the U.S. is on
SEC/CFTC registration, compliance and reporting.
U.S.-based managers were three times more likely
to be focused on these rules than on AIFMD, which
definitely represented a secondary set of concerns.
Many of these managers have clients based in Europe
and/or trade European markets as a part of their
portfolio. The impact of marketing and remuneration
requirements associated with AIFMD on U.S.
managers is being hotly debated at present, but not
much work is being contemplated at the present
time. Some lingering alignment to the Dodd-Frank
derivative clearing rules and assessments for how
EMIR, the European version of those regulations, may
affect existing solutions is showing up in our dataset
as a minor focus. Neither FATCA nor emerging Asian
regulations are showing up as a significant concern.
In EMEA, this situation is strikingly different. There
is an extremely high level of concern and a large
expected focus on registration, compliance and
reporting across both the SEC/CFTC and the AIFMD
set of regulations. Derivative clearing requirements
are also registering as a secondary, but still significant,
All
Functions
SEC
RegUlation
& Reporting
AIFMD
RegUlation
& Reporting
Deriv
Clearing
Fatca
Asia
Regulatory
Americas
APAC
EMEA
Chart 38: Projected Regulatory Impact by Region
Zero
Mild
Moderate
Significant
Severe