The Cost of Scaling Mount Dodd-Frank

October 17, 2012 Attain Capital 2 Comments  Like
Macro Commentary

The volumes you could fill with criticism and praise of the Dodd-Frank Wall Street Reform and Consumer Protection Act… well, it would be almost as long as the bill itself. Much has been made of how complex and expensive the new regulations will be for businesses – and for those who still aren’t sure quite what the law contains, Businessweek has a great interactive graphic breaking down many of the highlights.

But despite all the arguing, Dodd-Frank has been steadily coming into full effect. Rather than just arguing about how the new rules will affect the financial industry, we’ll soon be able to just watch it in action. In fact, the results of a recent survey are already providing a first look at how hedge funds are reacting to the new rules:

A majority of advisers estimated the cost of compliance with Dodd-Frank at somewhere between $50,000 and $200,000 (with a significant minority putting the price tag between $100,000 and $400,000+) and the majority also put the time required to comply with Dodd-Frank at under 500 hours.

In response to Dodd-Frank, a majority of respondents have: (1) outsourced compliance work, (2) hired additional counsel, (3) instituted new record-keeping policies, (3) hired additional staff, (4) changed marketing materials and (5) changed communication with investors. A minority of respondents have changed their funds’ legal structures in response to registration and disclosure requirements.

The gist of the results seems to be that the new rules aren’t quite as onerous as some feared – though the cost is certainly real. Now we’re starting to have an idea of how expensive Dodd-Frank will be – but will the new rules bring stability the financial system? On that question, the jury’s still out.

2 comments

  1. matt
    October 17, 2012

    So its a jobs bill, just look at all the jobs it just created.

  2. Infographic: Dodd-Frank Background and Progress « The Joy of Tax & Litigation Law
    December 12, 2012

    […] The Cost of Scaling Mount Dodd-Frank (managed-futures-blog.attaincapital.com) […]

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

Limitations on RCM Quintile + Star Rankings

The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.

See the full terms of use and risk disclaimer here.

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