Relevant industry content we've curated covering a wide range of topics
Hedge Funds Snag Bigger Share of Assets from Sovereign Funds: SEC
Sovereign wealth funds have been among the fastest-growing groups of investors at large hedge funds over the past decade, according to new data from the Securities and Exchange Commission.
That growth dovetails with a hiring surge by hedge fund managers in recent years for their offices in the Middle East, and particularly in the Gulf states.
According to a recent analysis of Form PF filings by the SEC, sovereign wealth funds and foreign official institutions accounted for 7.5% of the aggregate net asset value, or NAV, at so-called qualifying hedge funds in 2023, up from 5.3% in 2013. A qualifying hedge fund manager has at least $500 million in assets.
“You’ve got similar benefits to like if you were to incorporate a fund in the Cayman Islands. There are tax benefits being in a financial center, like the [Dubai International Financial Centre],” said David Goldstein, director of fund services at STP Investment Service.
Having a local presence also can help unlock new mandates, he said.
“If you have a sovereign wealth fund, especially a Gulf state sovereign wealth fund that’s looking to make investments, they probably rather do it through a Gulf state incorporated vehicle, rather than a Cayman vehicle,” Goldstein said. “It keeps things closer to home. The tax advantages are probably similar or the same, plus it increases employment in their area.”
Read what David and other subject matter experts had to say in FundFire here.
SEC Investment Management Director to Leave; No Successor Named
The director of the Securities and Exchange Commission’s Division of Investment Management, Natasha Vij Greiner, is leaving the agency, as SEC Chair Paul Atkins seeks to refocus the agency.
The SEC has not yet named a successor for Greiner, whose exit is effective July 4, leaving the investment management division’s priorities unclear, said Igor Rozenblit, a managing partner at Iron Road Partners.
As director of this division, Greiner has been responsible for administering the Investment Company Act of 1940 and the Investment Advisor Act of 1940, which oversees investment vehicles, companies and advisers, according to a press release from the SEC.
The reduced headcount adds to the uncertainty over the agency’s priorities, said Cynthia Kelly, managing director of compliance at STP Investment Services, in an email to FundFire.
“Hundreds of staff have taken voluntary buyouts or are exiting under cost-cutting pressures, raising concerns about institutional knowledge loss,” she said.
Read more on what Cynthia and other subject matter experts had to say here.
‘Dirty’ Data Complicates Managers’ Alts Push
Asset managers and fund administrators are wrestling with major data hurdles in the alternatives space that could amplify operational problems as firms push these strategies to a broader investor base.
Some firms are trying to use generative artificial intelligence and automation to solve these issues but are still facing roadblocks, industry executives said.
A.I. in U.S. Ops May Help T+1 Overseas
The U.S. securities operations industry is seeing a boon of interest in artificial intelligence (A.I.) tools — from generative A.I. to predictive fail systems — as global market participants prepare for tighter settlement cycles across Europe, the United Kingdom, and Switzerland from Oct. 11, 2027.
This wave of enthusiasm comes as global financial services institutions face the daunting technological challenge of coordinating among 27 European Union member countries — each with its own financial market infrastructure — as well as Switzerland and the U.K. Firms are equally wary of costly settlement penalties mandated under the E.U.’s Central Securities Depositories Regulation (CSDR) and similar rules in the U.K.
Kaisha Schnoll, vice president, settlements at STP Investment Services, says T+1 in the U.S. went a lot smoother than everyone anticipated. But she says she doesn’t think it will be so simple when it comes to the U.K. and Europe. Anecdotally, Schnoll says, a lot of brokers and custodians, and investment firms have yet to adopt technology and automation. Furthermore, current financial penalties for fails in the U.K. and the E.U. mean that as they move to T+1, “there’s even more at risk.”
“And I think that that’s what’s going to motivate a lot of these firms and investors to put the resources and the budget behind preparing for T+1,” she adds.
STP Investment Services is not yet utilizing A.I. within its trade settlement platform. Over the past year, it has been looking at a fail module that uses A.I. to predict failures. The tool uses A.I. to analyze data from custodians, brokers, and securities lending agents, alongside positional data to predict whether a trade will settle or not. It also includes a built-in tool to calculate CSDR penalties.
Read more from Kaisha and other subject matter experts in FTF here.
Bitcoin Bump, Volatile Markets Boost Crypto Hedge Funds
Pensions and endowments are increasingly exploring incorporating digital assets into their portfolios, though only a handful have reached the point of pulling the trigger on new allocations to crypto-focused hedge funds, according to industry observers.
Various factors – including volatile public markets, a rosier regulatory picture and new cryptocurrency price peaks – are opening the door for institutions.
There is a lot more interest among pension funds and endowments this year as the Trump administration advocates for a friendlier environment for digital assets regulation and investing, according to Chris Rhine, head of liquid active strategies at Galaxy Digital, a crypto banking and trading platform.
Hedge Fund Launches Plummet as Investor Sentiment Wobbles
Hedge fund managers are launching new funds at the slowest pace in more than decade as a choppy economic environment buffeted by the Trump administration’s evolving policies has left investors unnerved and has exacerbated what was already a difficult fundraising environment.
Only 88 new hedge funds came to market during the first quarter, the slowest quarter for launches since 2020, according to data from Preqin. Another 15 funds launched in April and May, putting the industry on pace to have fewer funds debut this year than the 618 that launched in the second quarter of 2020 at the height of the Covid-19 pandemic.
Atkins to Push ‘Thorough Economic Analysis’ of SEC Rules
Securities and Exchange Commission Chair Paul Atkins last week called for a “robust” economic analysis of SEC rules amid “ongoing changes in financial landscapes,” adding that previous agency leadership focused heavily on “regulatory expansion over meticulous economic analysis.”
Atkins, who was sworn in last month, said it was a “new day at the SEC” and crucial that the agency ensures “thorough and unbiased economic analysis is not being overshadowed by any driving desire to implement regulatory measures that impose unnecessary burdens on our markets.”
Atkins “may revisit the economic basis of already-adopted rules, slow or halt pending rulemakings that lack robust economic justification or use cost-benefit analysis to reframe existing proposals,” Cynthia Kelly, a managing director for compliance at STP Investments, said in an email.
Atkins is also expected to create a regulatory framework around crypto and tokenization, artificial intelligence, and the expansion of alternatives into the retail channel, she added.
Read more of what Cynthia and other subject matter experts had to say here.
Private equity firms tap co-investments for new growth opportunities
Co-investing has long been considered a niche strategy in private markets, but that perception is rapidly changing. Shifting market dynamics, rising valuations, and increasing investor demand are positioning co-investments as a key strategy for fund managers and LPs in 2025 and beyond.
This shift is already evident in investor allocations. Goldman Sachs’ 2024 Private Market Diagnostic Survey found that 50% of LPs now allocate to co-investments, up from previous years. The trend also appears to be on the rise among GPs in the year ahead.
Read the rest of what David Goldstein, Director, Product – Fund Services had to say in Pensions and Investments here.
SEC to Reconsider Closed-End Fund Retail Restrictions
Securities and Exchange Commission Chair Paul Atkins said Monday he is directing the agency to reconsider two decade-old rules that prohibit retail investors from tapping into closed-end funds, such as interval funds and business development companies.
Atkins said the SEC will reexamine a 23-year-old practice in which closed-end funds that allocate 15% or more to alternatives require $25,000 initial investment minimums and are open only to accredited investors.
T+1 in the UK: Why the road ahead will be harder than the US playbook
In February 2025, the UK’s Accelerated Settlement Taskforce (AST) published its long-awaited T+1 Settlement Plan, signalling the country’s intent to shift to a one-day settlement cycle by 11 October 2027. While that date may appear comfortably distant, the reality is that the path to T+1 is likely to be far more complex than the US transition that happened last year, writes Kaisha Schnoll, vice president, trade settlements at STP Investment Services.
The Rise of Co-Sourcing and Lift-Outs
In recent decades, emerging fund managers have increasingly turned to fund administrators to streamline operations, reduce costs, and mitigate risks. By outsourcing key functions, they’ve been able to focus more on investment strategies and growth. This trend is expected to continue into 2025 and beyond. However, what about established fund managers who began operations before this model became popular? How are they adapting to the new demands for operational efficiency, reduced risks, and investor satisfaction? The answer lies in evolving operational strategies such as co-sourcing and lift-outs.
These models provide established fund managers with a blend of efficiency, flexibility, and risk management while preserving some internal control. In this article, we explore how these strategies are transforming operational models for older asset management firms and enabling them to compete in a rapidly changing financial landscape.
Challenges for Established Fund Managers: A Changing Landscape
Many established fund managers have spent years building their operations without the benefit of outsourced administrative functions. While this structure may have worked in the past, today’s complex regulatory environment and increased investor demands are prompting many managers to reconsider their operational models.
Read what our subject matter expert, David Goldstein, had to say in Uncorrelated here.
STP Shortlisted for Multiple Awards at the FTF News Technology Innovation Awards 2025
We’re proud to share that STP Investment Services has been officially shortlisted for four categories in the prestigious 2025 FTF News Technology Innovation Awards — a recognition that highlights our continued commitment to operational excellence and technology-driven solutions across the financial services landscape.
Our nominations include:
- Best Global Settlement Solution
- Best Middle-Office Solution
- Best Middle-to-Back Office Integration Solution
- Best Outsourcing Provider
These nominations reflect the hard work and innovation of our incredible team, as well as the strong partnerships we’ve built with our clients. From streamlining post-trade processes in preparation for the T+1 settlement shift, to enhancing middle- and back-office efficiency with our Blueprint technology, STP is proud to lead the way in solving real-world challenges with flexible, scalable, and personalized solutions.
Being recognized across four categories is not only an honor — it’s a testament to our mission of helping investment firms modernize operations, reduce risk, and grow confidently in a fast-evolving industry.Voting opens Wednesday, April 16, and runs through May 9th via the FTF voting link here – https://www.ftfnews.com/awards/ftf-news-technology-innovation-awards-2025/?section=categories_nominees
Winners will be announced in New York City on June 17, 2025.
