Hedge Fund Research L.L.C., Chicago, is developing a hedge fund manager risk monitoring system for internal use and eventually might market the system to pension funds and other investors, said Joseph Nicholas, president.
The system uses daily trade data gathered electronically from prime brokers or custodians to monitor investment restrictions for a stable of hedge fund managers, he said.
In developing the system, setting up electronic links with brokers and custodians - which use their own data formats - is the hardest part, he said.
The system can handle leverage as well as complicated securities such as collateralized mortgage obligations, futures and options, he said.
The system is running internally for a pension fund client the firm recently signed, Mr. Nicholas said. He wouldn't name the fund. Affiliated HFR companies offer manager-of-managers funds, consulting, and hedge fund data publishing.