Securing Returns in Alternative Investments

good afternoon thank you very much thank you for your attention and and thank you to uh the Abu Dhabi Finance week for the opportunity to talk about the SBI uh I I'll be very brief this is going to be a very uh uh brief conversation um the the financial industry is complex we've heard about risks we've heard about risk management policies and and standards in particular in the asset management industry the so-called alternatives are the highest complexity end of the industry so alternative Investments comprise hedge funds private Equity Venture Capital real estate so these are areas that are Frau with complexity in the relationship between the allocator the investor and the manager so I want to begin by just quoting a couple of examples of conflict areas that turn up in these uh in these situations and again you know as you heard I I am involved with the hedge fund industry I have the privilege of acting as a CEO of systematica we are relatively large a hedge fund manager and so for example trade errors what constitutes a trade error what is the line between error occupational hazard of doing difficult things and and negligence who's to decide what's the Threshold at what level does the manager who committed a trade era in good faith has to reimburse the investor for the cost of that error and and if that error makes money for the investor who keeps that money just one example of areas of conflict between the manager and the investor or potential conflict so another example is a uh uh partner owned Capital so some managers like to run their own money in parallel with money that they run for outside investors what are the conduct rules what are the limits what are the reporting requirements so these are a couple questions there to to make us think about the fact that the industry is complex and relying on governments to come down and tell exactly how to do things to me should be a last resort and this industry is filled with highly competent professionals we ought to be able to come to the table and propose some standards before the government even comes down asking meantime we've just seen the US election and and how many times in that campaign Trail was the topic of excessive regulation brought up H quite a bit so there you go so with that in mind H the SBI is the standards board for the alternative Investments industry it was started in 2008 it was a voluntary organization it's obviously not for profit I act as one of the trustees of the organization the organization has uh a representation of over 9 trillion in assets so we have uh over 160 managers as signatories we have a very large large number of uh allocators public Pension funds Sovereign wealth funds uh it's all actually public information if you if you care to take a look at our website so the Standards Board of alternative Investments the sbai is an alliance it's the really elegant way to address the needs for regulation in a complex industry so we keep the SBI balanced between the client side and the manager side you know alongside me at the table of the trustees we're about half and half manager and allocator we all very senior Professionals in the industry I for one started in the financial industry in 1993 I've been around a while uh and the SBI then aims to promote standards okay so these standards are then discussed by practitioners of the industry both sides look this is diff ult trade errors what are the situations what are we going to do about it what is going to be our proposed standard on the matter and you know this has got to be a much better solution than as I say relying on governments to tell us what the rules should be and so uh this is the SBI the the the as I say it's a Global Alliance it's got quite a lot of membership um it's not for profit we run a very very lean organization we employ about four people we don't run big offices nothing like that it's all about promoting that Forum where the two sides can get together and agree on what a sensible standard should be okay so there you go so there are five areas of standards that we act on they are disclosure valuation risk management fund governance and shareholder conduct the names speak for themselves I I don't need to say anymore the the website is filled with useful information even for example for the the young startup manager that wants to look at a sample prospectus wants to get guidelines on what a good due diligence questionnaire should look like wants to understand what good standards for reporting should look like so we've got a lot of that material in there accessible for free uh and there are lots of ways of getting involved of course membership the the fees are very low you know it's it's really not a money-making organization but we try to promote uh working groups forums um um communication groups where people can exchange you know we are competitors sometimes as managers but Above All We Are peers we we are all facing very similar issues it's nice to be able to to exchange information and so in particular we ran 75 events in in 2024 alone globally we have presentation across the world again these events are not for profit they're not chargeable we get amazing speakers coming to our technical events the audience is fantastic I just attended one in a Stockholm just last week quite different weather from here I must say um we have working groups on various topics the working groups tend to last maybe one or two years each H you know whatever the the the topic of the moment is as I say policy valuations ILS private Equity uh claw back rules fee schedules working groups come and go as the need may be and we have also communities so for example operational leaders I know the CFO of of our firm is quite engaged with the uh the CFO community of the S SP because they exchange experiences they want to know what did you do when that happened you know you have somebody to call and you have somebody to ask uh a lot of uh papers can be found also on the website there's a few examples there of some of the the recent topics you can see something on trade erors you can see some guidelines on the role of the independent director of the fund um there's a little bit on operational due diligence so quite a few examples there and really that is all I had to say so I hope you will remember out of everything that you heard today oh that woman stood up to talk about the SBI I ought to take a look look at that website take a look at the website there's a lot of very useful information about investment in general but about the alternative investment Industries and and and its practices and and its standards and and I hope you find it useful and you you engage with the svi that is it thank you very much