Hedge Fund Vendor Agreements

Hedge fund managers require various third party vendor-provided products and services to manage their daily operations. Typical agreements entered into by hedge fund managers for such products and services include trading system agreements, license agreements for investment analysis tools, risk management and portfolio valuation software, market data license agreements, software development agreements, hardware purchase agreements, website design agreements, consulting agreements and administration agreements.

All vendor agreements cover a common set of issues, including vendor performance obligations, indemnification and limitations on liability. In addition to these common issues, vendor agreements entered into by investment managers contain a few distinctive issues arising from the unique structure and the private nature of hedge fund groups. These unique issues are discussed in this article with emphasis on information technology agreements.