JERSEY CITY, N.J., October 5, 2009 — Pershing LLC, a BNY Mellon company, and Aite Group LLC have published a new whitepaper that examines critical hedge fund operations and provides managers with best practices and a systematic framework for helping them select and effectively manage relationships with third-party outsourcing solution providers.

The whitepaper entitled, Fueling Growth: Outsourcing Solutions for Hedge Funds, is available through Pershing Prime Services and BNY Mellon Alternative Investment Services. According to the report, an increase in client redemption requests is threatening the viability of even the most well-managed hedge funds. Many fund managers are taking action by reassessing their overall investment strategies and evaluating their relationships with key service providers, such as those with prime brokers, fund administrators and information technology companies. Hedge funds must consider a multitude of factors to help make an informed decision on establishing an outsourced vendor relationship, including cost, evaluating disparate information, balancing internal resources, prioritizing short- and long-term business goals and establishing appropriate relationship metrics. Key findings from the whitepaper include:

• Choosing the Proper Outsourcing Model - A majority of hedge funds have favored the approach of implementing a hybrid outsourcing model because it provides them with operational flexibility to meet short-term goals using third-party service providers for some key functions, while allowing the firm to develop internal capabilities for long-term expansion;
• Smaller Hedge Funds Challenged by Resource Restrictions - The hedge fund market is dominated by small- and mid-size funds, many of whom lack expertise in specific functions and have limited resources. These funds often opt to outsource a significant portion of their functions to third-party solution providers and to their prime broker. Smaller hedge funds should also consider outsourcing essential business functions including legal, accounting, administrative and back-office-related tasks, such as clearing and trade reconciliations;
• The Role of the Prime Broker - Most leading prime brokers have seasoned internal consulting teams who have relationships with a broad array of service providers--such as law firms, real estate agencies, recruiting firms and software vendors--and can facilitate introductions with various vendors who can potentially meet the needs of the hedge fund. Hedge funds should consider seeking out their prime broker's counsel before establishing a new relationship with a third-party firm; and
• Consider Disaster and Recovery Planning in Vendor Selection - The stability of a third-party solution provider should be an important consideration for hedge funds as it relates to their disaster and recovery planning. As hedge funds rely more heavily on outsourced services, they should execute proper due diligence on a vendor's financial viability, technology capabilities, contingency around business continuity and disaster recovery, management and customer service.

To help hedge fund managers better understand business continuity and disaster recovery planning processes and principles, Pershing Prime Services, in collaboration with Eze Castle Integration and its colleagues across BNY Mellon, has developed a guidebook entitled, Establishing Business Continuity and Disaster Recovery Plans: A Hedge Fund Manager's Guide. The guidebook provides fund managers with strategic insights into creating thorough plans that may help minimize financial loss and the negative effects of downtime on their firm's strategic plans and operations.

Craig Messinger, managing director of Pershing Prime Services, said, "It is important for hedge funds to develop a thoughtful, long-term outsourcing strategy to ensure that its needs for support during various stages of the fund's lifecycle are closely aligned with its goals and objectives to serve investors well. Employing this type of approach will enable hedge fund managers to focus on generating profitable returns for their clients and help them grow their businesses in a more productive manner."

Sang Lee, managing partner at Aite Group LLC, added, "Substantial benefits exist for hedge funds that develop strong outsourcing relationships across their businesses. However, selecting the right vendor relationship is a complex process. It is critical that fund managers develop a thorough process to understand their own needs as well as evaluate vendor relationships for cultural fit and long-term continuity."

Pershing's parent company, BNY Mellon, also provides a wide range of administration services to hedge funds, funds of hedge funds and private equity assets through BNY Mellon Alternative Investment Services, one of the world's leading providers in this market segment with more than $200 billion in hedge fund assets under administration. In addition to hedge fund administration, BNY Mellon offers a wide range of accounting, cash management, collateral management, custody, asset management and wealth management services to the hedge fund industry.

Pershing Prime Services delivers an unconflicted, comprehensive suite of global prime brokerage solutions, including extensive access to securities lending, dedicated client service, robust technology and reporting tools, worldwide execution and order management capabilities, a broad array of cash management products and the integrated platform of BNY Mellon. Pershing Prime Services is a service of Pershing LLC. A copy of Pershing's new whitepaper and guidebook, and additional information regarding Pershing Prime Services' capabilities and solutions, can be found by visiting www.pershingprimeservices.com.

Pershing LLC (member FINRA/NYSE/SIPC) is a leading global provider of financial business solutions to more than 1,150 institutional and retail financial organizations and independent registered investment advisors who collectively represent approximately five million active investors. Located in 20 offices worldwide, Pershing and its affiliates are committed to delivering dependable operational support, robust trading services, flexible technology, an expansive array of investment solutions, practice management support and service excellence. Pershing is a member of every major U.S. securities exchange and its international affiliates are members of the Deutsche Borse, the Irish Stock Exchange and the London Stock Exchange. Pershing LLC is a BNY Mellon company. Additional information is available at www.pershing.com.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $20.7 trillion in assets under custody and administration, $926 billion in assets under management, services $11.8 trillion in outstanding debt and processes global payments averaging $1.8 trillion per day. Additional information is available at www.bnymellon.com.