Reining in the number of side letter iterations helps with later management of obligations, but even a fund that manages to negotiate one version of a side letter with all of its investors needs a system for tracking side letter obligations that involves reporting from all functions overseeing trigger events. “Most favored nation” (MFN) provisions alone require careful tracking, especially with investors coming into and out of open-end funds. Those systems should be put to the test, through normal compliance processes or otherwise, to ensure side letter compliance. This third article in a three-part series considers effective tracking systems; the need to test side letter compliance; and the MFN election and monitoring process. The first article discussed the importance of effectively managing side letters and the challenges fund managers face in doing so, as well as how forward-thinking negotiation can lead to more effective management. The second article explored which functions or individuals should be responsible for side letter management and how to effectively document obligations and triggers, plus the need for better technology for that purpose. See “How Hedge Fund Managers Can Accommodate Heightened Investor Demands for Bespoke Negative Consent, Liquidity, MFN and Other Provisions in Side Letters” (Oct. 13, 2016).