BNY Mellon has launched middle-office outsourcing services to hedge funds in Asia in response to a global trend of increased investor demand for transparency.
“We think that there is good demand for it [in the region],” says Andrew Gordon, head of BNY Mellon’s Alternative Investment Services division in Asia.
He notes that “many of the hedge funds in Asia are light on infrastructure” and are seeking viable service providers to outsource their operational functions. “They don’t want to necessarily make that investment themselves.”
BNY Mellon is offering a range of post-trade and pre-settlement middle outsource functions, including interactive profit and loss reporting, real-time trade processing, reconciliation, and over-the-counter confirmation and valuation. The services can be used by hedge funds across all strategies and currencies.
The bank’s middle-office service platform links real-time trade capture and reporting functions with other operations, such as risk reporting and cash and collateral management. Hedge fund clients are able to receive third-party administrator verifications on the fund’s operations – a feature that is being sought by a growing number of institutional investors, says Gordon.
BNY Mellon started offering middle-office outsourcing to hedge funds in Europe two years ago, and has since made infrastructure and technology upgrades that have enabled the platform to be extended to Asia and North America, according to Gordon.
In Asia, the service is expected to be of most interest to hedge funds with institutional investors, which generally tend to be at least $100 million in size. Large funds comprise the bulk of BNY Mellon’s custody services clients.
Gordon adds that smaller hedge funds, which could capably grow to $100 million or more, have also shown interest, as they view the outsourcing service as a way to gain institutional-level middle-office capabilities without having to invest in the necessary manpower and infrastructure.