Q&A: Supporting the Evolution of the Industry
A Q&A with HFM following ACA Mirabella’s win at the HFM European Services Awards, taking the title of Best Regulatory Hosting for the sixth successive year.
Ant Bennett, Head of Sales and Client Development for ACA Mirabella recently spoke with HFM about the role that regulatory hosting platforms have played throughout the Covid-19 pandemic, the impact of remote working and what lies ahead for financial services firms. Here are Ant’s perspectives:
HFM: What role have regulatory hosting platforms have played in supporting the fund space throughout the pandemic?
Ant: The global pandemic has forced firms to reconsider the way they operate. As a result, we’ve seen three key trends transpire: an increase of firms’ reviewing their structure; the launch of new funds and the acceleration of new and emerging fund strategies.
Firstly, the initial driver and recognition of the structural changes that needed to take place was the rise of the distributed workforce, which has seen a far greater, even absolute, reliance on communications over messaging services such as MS Teams, Slack and Skype. As the pandemic went on and these trends accelerated, a number of our clients found themselves restructuring their businesses based on the physical location of their management and employees.
This has primarily meant an influx of clients moving into the jurisdictions where they've got regulatory coverage. For example, we've seen managers of firms that are overseas firms, move back to the UK or other countries where they have familial links, considering such locations preferable throughout this uncertain time. Consequently, they need regulatory coverage to continue the undertaking of various business activities, wherever they are conducted.
Secondly, the volatility brought about by the pandemic has given rise to a number of opportunities for fund launches. During the first half of the pandemic, many firms took a 'wait and see' stance to assess whether they could operate with the coverage they needed. But the attention has shifted focus as the pandemic has progressed, leading to new trends within the industry at large.
Lastly, we’ve seen a shift in strategies. At the start of the pandemic, there was a push towards credit and mezz equity structures. Over time, we've seen a move back towards thematic-recovery based strategies. And throughout the pandemic we’ve seen an accelerated interest in areas such as ESG and clean energy. At ACA, we see both the open ended and closed ended funds. In the private equity space, we've seen pivots within the same strategy, such as a move from commercial to residential focus on property and infrastructure.
HFM: What changes from this time do you think will be here to stay?
Ant: I don't think it should be lost on anyone that, for all intents and purposes, the mechanical effects of Brexit took place in the middle of the pandemic. And the impact of those changes is far reaching. There are some consequences, namely the lack of equivalence, where financial services were not appropriately covered in the memorandum of understanding for UK firms that have interests in the EEA.
Firms have grown accustomed to operating in digital, remote environments – especially during the pandemic – and this is another area I think will be here to stay in the future, in some form or another. So it's more important than ever that firms be aware of the scope of permissions, which are based on their geographical location at the time. As regulators will start to get to grips with the fact rules around marketing have to be addressed closely and in turn emphasise that firms need to be very aware of the necessary changes to their operating models post 31 December 2020.
I also believe there is a broader conversation to be had by the regulators as to the extent to which marketing should be captured by receipt and transmission of orders under MiFID II. While this is a Brexit-centric point, it is also very much a consequence of people being part of the distributed, agile workforce we discussed earlier; that's clearly going to continue because people will want to continue working remotely. It'll be interesting to see how much asset raising physically goes on through the old classic roadshow type environment.
The flip side to this is that while we've seen companies sending staff to work out of the UK, we've also got UK firms that have had their employees disappear off back to their ancestral homes elsewhere. Such individuals may wish to continue to work from that remote environment, and therefore hosting firms will adapt to providing coverage outside of Europe, too.
Our own ACA Mirabella solution confers the MiFID passport back onto a European entity for clients through our Malta office. Other solutions include professional distribution agents, and various MiFID entities being created by new firms.
HFM: What is your future outlook for the industry?
Ant: We’ve seen that seed investors and pension funds start to look into hedge funds again, and therefore it's likely there will be a flow of investment back into hedge funds. In fact, there's not been a great outflow of redemptions; this period of time has been more of the classic cyclical change where it's been reappointed to new homes. From what I hear, business is thriving, and there are a lot of early-stage conversations and more mature conversations we have been having with clients within ACA.
I also hear that prime brokers are very much committed to the fact we are going through another growth phase in the hedge fund space.
Right now, the opportunities, launches and asset inflows are there, and for any firm outside of Europe that wants to launch, may not currently be looking to set up a UK or European-based regulatory office and would, therefore, be reliant on a regulatory host in the first instance. And we may well see some record launches coming back to the fore over the next six months or so.
This is undoubtedly an exciting time period for us as this is why we exist as a regulatory host. At ACA, we have a strong track record of supporting some of the highest profile hedge fund launches in recent years – and with the support of the wider ACA Group, we empower them to reimagine governance, risk and compliance to protect and grow their business. We greatly enjoy working with our clients and helping them to achieve their goals.
On a winning streak
This win came hot on the heels of ACA Mirabella being awarded the title of Best Regulatory Hosting Platform, at the Hedge Week European Awards 2021
At the HFM European Services Awards 2021, ACA Group also won:
• Best GRC advisory firm, ACA Group.
• Best cyber-security Service, ACA Aponix
How we help
ACA Mirabella offers a range of award-winning services, including regulatory hosting solutions for discretionary fund (AIFM) and managed account management, investment advice, the arranging of investment deals, placing, and for local marketing or fund distribution in the UK and throughout the EU.
ACA Mirabella tied agent MiFID-passporting solution is also one of our many Brexit solutions designed to help global firms find solutions to overcome their Brexit challenges and continue to access the UK markets.
About Ant Bennett
Ant Bennett is head of sales and client development at ACA Mirabella, the regulatory hosting platform of ACA Group. He has a 20-year career in financial services, formerly holding a consulting role held at Capco, where he established their Prime Brokerage consulting division. Before that he was head of Prime Brokerage at KPMG. This was preceded by prime brokerage roles at HSBC and Société Générale, where he was Managing Director. He started his career covering hedge fund clients in the front office at Morgan Stanley and Goldman Sachs.
Ant was recently recognised in the TwoandTwenty Top100 Most Influential People in Service Provision for the Investment Space.