Margin Management for Hedge Funds; An Increasingly Complex Calculation

Cassini commissioned Acuiti to conduct a study of how hedge funds were managing margin and collateral in the face of UMR, heightened volatility, and increased scrutiny of risk from prime brokers

The report showed that:

  • There remains significant uncertainty among hedge funds over whether they will be in scope for UMR Phase 6
  • This uncertainty is creating a risk for hedge funds that they could be facing significant consequences by coming into scope for UMR late or without sufficient preparation for compliance
  • Hedge funds are becoming more sophisticated in terms of how they manage margin and collateral but there is a long way to go still:
    - Just 13% aggregate and analyze margin requirements intra-day
    - 78% of respondents consider margin when deciding where to trade but most of these only do so some of the time
    - 30% of respondents said they had a view of margin implications available to traders pre-trade.
Also in this report:
  • What actions have prime brokers taken with regards to their hedge fund clients following the collapse of Archegos Capital Management?
  • How have hedge funds changed the number of prime broker relationships?
  • What actions are hedge funds taking to mitigate the impact of higher margin requirements?
  • What are the top challenges hedge funds face in their collateral operations?

Download Report

technology HFM post trade