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Fund Custody and Administration

Book Description

Fund Custody and Administration provides an overall perspective of investment funds without limiting its analysis to specific fund structures, as other books do. Since governance and oversight of investment funds are now major regulatory requirements, administrators and custodians must place greater emphasis on the custody and safekeeping of fund assets, on the independent and robust valuation of the assets, and on collateral management. By focusing on both the asset transactions made by the investment manager for the portfolio and on the transactions in the shares or units of the fund itself, it gives readers insights about the essential elements of investment fund management and administration, regardless of their geographical backgrounds.

  • Explores the key stages in the investment process, from setting up a fund through its launch and operation
  • Explains the roles of participants as well as the ways regulation affects the fund and its operation
  • Describes the work flow associated with custody and administration procedures and processes
  • Defines the role of compliance and risk management in the context of the fund and also how compliance requirements apply to custodians and administrators

Table of Contents

  1. Cover
  2. Title page
  3. Table of Contents
  4. Copyright
  5. About the Author
  6. Preface
  7. Introduction—What Is Fund Administration and Custody
  8. Part 1: Introduction to Investment
    1. Abstract
    2. Investment environment
    3. Islamic investment funds
    4. Unregulated funds
    5. Investment strategies
    6. Using derivatives
    7. Portfolio management
    8. Investment performance
    9. Risk versus reward
    10. Performance ratios
    11. Investment management fees and costs
    12. Summary
  9. Part 2: Regulation and Fund Structures
    1. Abstract
    2. Overview of regulation
    3. Regulation and directives
    4. AIFMD and AIFMs
    5. Retail funds
    6. UCITS directive
    7. Money laundering
    8. Principles and recommendations
    9. Fund of funds
    10. Multimanager funds
    11. Other structures
    12. Retail funds
    13. Hedge funds
    14. Retail/mutual fund custodian
    15. Fund administration
    16. Prime broker/brokers
    17. Documentation and agreements
    18. Summary
  10. Part 3: The Day-to-Day Operation of a Fund
    1. Abstract
    2. Introduction
    3. Process workflow
    4. Investment capital
    5. Investment process
    6. Asset servicing
    7. Fund operations
    8. Valuation and accounting
    9. On-exchange pricing and valuation issues
    10. Valuation checklist
    11. Income and expense
    12. Margin and collateral
    13. Distributions
    14. Performance fee calculation
    15. Transfer agency
    16. Distributions
    17. Custody and depositary
    18. Global custody
    19. Securities lending and borrowing
    20. Characteristics of securities lending
    21. Uses of securities lending
    22. Securities lending precautions and controls
    23. Borrower default
    24. Day-light exposure
    25. Settlement delays
    26. Market inefficiencies
    27. Collateral
    28. Securities
    29. Certificates of deposit
    30. Government bonds
    31. Equities
    32. Irrevocable letters of credit (L/Cs)
    33. Securities lending agreements
    34. Role of the prime brokers/global custodians
    35. Nondiscretionary program
    36. Discretionary (or managed) program
    37. Operating the pool
    38. Benefits and entitlements
    39. Lenders’ rights
    40. Manufactured dividends
    41. Role of the custodian or intermediary
    42. Importance of accuracy and timeliness
    43. Actions required
    44. Implications for collateral
    45. Repurchase agreement (repo)
    46. Securities lending relationship structure
    47. Summary
  11. Part 4: Risk
    1. Abstract
    2. Risks faced by a fund and how the administrator can assist the fund to manage the risks
    3. Operational risk
    4. Types of risk
    5. Self-assessment and measuring risk
    6. Risk scenario analysis
    7. Conflict resolution exercise
    8. Risk of fraud in finance
    9. Risk terminology
    10. Glossary of risk terminology
    11. Summary
  12. Part 5: Introduction to derivatives
    1. Abstract
    2. Introduction
    3. Exchange traded futures and options
    4. OTC derivatives
    5. Swaps
    6. Appendix A—useful reference websites
    7. Appendix B—OCC STANS
    8. Appendix C—Dependence and Concentration
    9. Appendix D—Suggested Further Reading
  13. Part 6: Summary—Fund Administration Notes
    1. Abstract
    2. Exercise Answer
  14. Part 7: The Future of Fund Custody and Administration
    1. Abstract
  15. Appendix 1: The Investment Association Categorization of Funds
  16. Appendix 2: Source-Investment Association
  17. Appendix 3: Glossary of Risk Terminology
  18. Appendix 4: Organization of the SESC
  19. Appendix 5: Reporting Annex IV Transparency Information Under the Alternative Investment Fund Managers Directive
  20. Appendix 6: Questions and Answers: Application of the AIFMD
  21. Appendix 7: China Securities Regulatory Commission (CSRC)
  22. Appendix 8: October 2015—Top 10 Performing Funds
  23. Appendix 9: Global OTC Derivatives Market-Source BIS
  24. Appendix 10: Global OTC Derivatives Market-Source BIS
  25. Appendix 11
  26. Glossary of Terms
  27. Useful Websites and Links
  28. Index