A KPMG study reports that the overwhelming majority (94%) of hedge fund managers recognize the importance of investing in technology to compete and that compliance is a top reason (90%) to invest in technology. The report explains: “Given that — in 2013 — we estimated that compliance was costing the industry upwards of US$3 billion per year (and that number has likely risen much higher since), it is not surprising that compliance ranked as a top objective among our respondents.” The report also explains the importance of technology in the back office where improved data management allows firms “to meet the increased regulatory and investor reporting demands being placed on them.”
OUR TAKE: Technology that organizes and presents data has become a critical element to meet ever-increasing regulatory requirements especially in areas such as personal trading, email review, and investor reporting. Technology alone, however, is not a regulatory silver bullet. Firms must still retain top compliance talent who can assess, interpret, and react to the data and then advise senior management on how to proceed.