Administrator Rising to the Challenge
This article first appeared in The Hedge Fund Journal.
Maples Fund Services experienced a period of intense growth in assets under administration (AUA) in 2013, with the most recent Global Custodian Hedge Fund Administrator survey showing them flying up the rankings with a dramatic 31% AUA annual growth in Europe, and 24% growth globally.
The MaplesFS group of companies is wholly owned by the law partnership of Maples and Calder. Previously referred to as Maples Finance, MaplesFS commenced operations in 1997 in the Cayman Islands, with its origins tied to the provision of fiduciary and accounting services to special purpose vehicles used in structured finance transactions. 2003 saw the firm establish its investment funds division, and in 2005 MaplesFS expanded the investment funds division further to provide a complete range of fund administration services to various forms of investment funds, including hedge funds, private equity funds and funds of funds. As of today, MaplesFS provides all services through its two operating divisions, Maples Fund Services and Maples Fiduciary. To date, all growth experienced by MaplesFS has been organic, with offices in the Caymans and in addition: Delaware; Dubai; Dublin; Hong Kong; Luxembourg; Montreal; New York and Singapore, with facilities in London.
“Overseas investments have really started to pay off,” says Tyler Kim, chief information officer of MaplesFS. “Offices in Asia, the Middle East and Europe are doing phenomenally well. The growth in overseas offices has been attributable to a combination of managers performing well and new mandates, including ones within jurisdictions we have recently entered.”
A newly on-boarded client, Graham Rodford, chief operating officer of Omni Partners, commented, “Maples Fund Services presented a cutting-edge approach to servicing a complicated hybrid structure, and demonstrated considerable expertise in the administration of our latest fund. The firm’s long-term view of the relationship as well as its close relationship with Maples and Calder were key considerations in our decision to partner.”
The combination of fund and fiduciary servicing alongside the legal expertise offered by affiliate Maples and Calder is being recognised by the industry as a formidable combination and a welcome alternative to the bank custodian administration model.
MaplesFS will always be connected with its birthplace of the Cayman Islands and Maples and Calder, the biggest of the offshore law firms by headcount, but the firm has expanded exponentially beyond its Caribbean borders, opening offices across the world. “We decided to lay down markers in a few regions, and are now getting traction and becoming recognised more widely in the administration space,” says Kim.
Singapore is the most recent of its international offices to open but two more are planned in North America and Europe this year. Dublin and Luxembourg are the current European hubs, with growth coming from new fund launches and mid-size conversions from other providers, as well as new family office mandates.
The firm was recently honoured with the prestigious award for Excellence in Technology and Regulatory Solutions by The Hedge Fund Journal in recognition of its continued commitment to delivering state-of-the-art aggregation and reporting technologies to new and existing clients, and diminishing the overwhelming regulatory challenges that many managers face. MaplesFS has a comprehensive approach to regulatory compliance and supports managers with reporting requirements for FATCA, EMIR, Form PF, AIFMD, CPO-PQR and OPERA. Senior vice president, Mark Weir, says: “Big institutional names are looking at what is involved to meet the new regulations and realising it’s a mammoth undertaking.”
Alternative investment fund managers had to seek authorisation from the local regulator by July, with initial Annex IV reporting for many managers due in by the end of October, as an example. “People knew it was coming but some didn’t realise the scale of what was involved,” says Weir. “AIFMD reporting requirements include the collection of approximately 2,500 data points and very specific calculations with regard to assets under management, leverage, liquidity and risk. It’s catching people off guard.”
MaplesFS works with industry-leading software providers who have brought products to the market to deal with the onerous new requirements. “The software solution is only one element. Data needs to be sourced, uploaded, and, most importantly, outputs need to be checked for quality,” says Weir. “This is where we can come in, as we have the data management expertise. We are used to dealing with data files in multiple formats coming from counterparties, brokers, custodians and managers, and can do the data mapping and transformation, and make sure it flows properly through the technology and can be thoroughly validated.”
As an example, Weir cites the European Market Infrastructure (EMIR). “As of February, details of derivative contracts concluded, modified or terminated must be reported to a registered trade repository,” he says. “That’s between 85 and 90 data points to submit, creating an extra burden on resources.“
With the final draft of the AIFMD regulations only coming out at the beginning of 2014, and the mid-year deadline, levels of preparation vary. “It appears that some people are really just starting to pay attention, and for many the first filing will be for Q3 data, with a submission deadline of 30 October.”
The regulatory services deployed by MaplesFS as a result of the wave of regulatory change that has rolled across the investment management industry in recent years are contributing to revenue growth for the firm. Kim comments that, with its affiliated law firm, MaplesFS has access to lawyers who were actively involved in defining many regulations, such as AIFMD. “We have the inside line and expertise which helps. It’s rare to find a group that does everything.”
The firm has also achieved traction with the institutional investor crowd and family offices globally. One recent win is with the Texas Tech University System – Maples provides consolidated risk and transparency reporting services to its $1 billion endowment. These reports are an integral part of an overhaul of Texas Tech’s investment programme, subsequent to the arrival of their new chief investment officer last year. Kim observes that some of the big institutional investors are beginning to look like hedge funds themselves. “Texas Tech uses a derivatives overlay programme for achieving synthetic beta, coupled with a hedge fund allocation to create a portable alpha pool. They needed someone who had strong experience in working with these types of strategies, and could help establish the operational infrastructure for such an undertaking.”
On Texas Tech’s behalf, MaplesFS aggregates data from managers, custodians, brokers and other external sources in order to produce reports containing exposure, performance and risk analytics. In addition, MaplesFS produces transparency reports that offer insights into managers’ activities and positions.
“Our consolidated reporting capability is useful to institutional investors pursuing sophisticated strategies and insourcing investment decisions.” The strength of the MaplesFS offering comes down to usability coupled with rigour, Kim believes. “Our reports are intuitive and resonate with boards. We’re not offering a canned software package, but rather something tailored specifically for our clients using their nomenclature and way of looking at the world.”
Deep industry experience supplements their reporting capabilities, says Kim. “When we design these reports, we use senior professionals who really understand what our clients are trying to do. We need to come up with methodologies that are in the end both highly customised and academically rigorous.”