As GPs prepare their first batch of reports under the Alternative Investment Fund Managers Directive (AIFMD) regime, industry service providers are urging them to first complete a “dry run” before filing.
Fund managers are being advised to dig through all the various question items and identify what assumptions may need to be made before completing their Annex IV reporting by the January 31 filing date.
Only a fraction of GPs thus far have taken the advice. A survey by Cordium, a compliance consultancy, found that only 30 percent of GPs plan to test drive their reporting procedures and filing capabilities before the deadline. A similar online poll conducted by pfm revealed similar conclusions: 40 percent of respondents said they’ve begun gathering the data needed for reporting but are not ready to perform a dry run.
“Managers should document those assumptions, which will at the very least provide a precursor to possible future challenges in determining what the national regulator is looking for,” said Joseph Henkel, operations manager at fund administration firm SEI. “[The European Securities and Markets Authority] hasn’t been too clear on the type of information they are looking for. That’s why we are urging managers to go through a dry run now. If they leave it to January, it may be too late to make any requisite changes.”
For instance, certain assumptions around valuation may be needed as managers wait for full Q4 data to come in. In this instance, advisors say GPs should communicate to regulators their though process and protocol when making educated guesses about fund data.
Non-EU managers, who must file Annex IV reports to whatever EU national regulator they choose to market in via the private placement route, must also take notice of when they are required to file their reports.
According Mario Mantrisi, a member of the executive board at fund administrator KNEIP, ESMA has said that to determine the frequency of reporting – which depends on assets under management (AUM) – a consolidated AUM position of the manager must be taken. But here complications can arise. For instance, a US manager marketing in the UK and the Netherlands might have raised €500 million in the UK and €500 million in the Netherlands, which ordinarily would equate to two Annex IV reports a year. However, an aggregate AUM of €1 billion means that the frequency of reporting becomes quarterly rather than semi-annually.