UK-based fund managers are struggling to interpret the reporting requirements of the Alternative Investment Fund Managers Directive (AIFMD), despite the first reporting
deadline for many approaching at the end of January.
Only half of alternatives managers participating in a survey by accountancy firm Moore Stephens were fully aware of the requirements for Annex IV reporting, which includes over 300 fields of data covering details such as investment strategies, market liquidity risk, and stress test results.
A further 42% said they were “somewhat aware” but unsure of the information required, while 34.8% said that they were not prepared for the actual reporting process.
Moore Stephens says an initial lack of guidance from the Financial Conduct Authority (FCA), the UK regulator, may be the reason that fund managers are unprepared, with firms originally only able to rely on guidelines from the European Securities and Markets Authority.
The FCA has subsequently provided further information on technical aspects relevant to the new reports, offering managers the opportunity to submit mock returns within a test environment.
The results of the survey, which covered 23 European Union firms and one from outside the EU, also showed that 88% of respondents surveyed were confident in the ability of their current systems to cope with the reporting requirements.
However, Moore Stephens advises that managers intending to rely on existing outsourcing arrangements with fund administrators should carry out appropriate due diligence reviews and risk assessments, to ensure their ability to provide appropriate systems for Annex IV reporting.
Tim West, partner in Moore Stephens’ financial services team, says: “We expect that a large percentage of AIFMs [alternative investment fund managers] may decide to outsource reporting requirements or seek assistance from third-party providers.”
He warns that, even under outsourcing arrangements, managers retain full responsibility and liability for their reporting obligations.
Funds Europe explores the January deadline for Annex IV reporting further.
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