UK FCA proposes increased AIFMD Annex IV reporting burden for non-EEA Managers

On 4 July 2016, the UK FCA released a Consultation Paper which featured a significant proposal to expand the current Annex IV reporting requirements. The proposed amendment will affect Alternative Investment Fund Managers domiciled outside of the European Economic Area (“non-EEA AIFMs”) which market in the UK under Article 42 of the Alternative Investment Fund Managers Directive (“AIFMD”).

Non-EEA AIFMs that market feeder AIFs in the UK currently do not have to report information on the master AIF unless it is also marketed within the UK. This has made Annex IV reporting for non-EEA AIFMs with master-feeder structures significantly less complex because there is no need to look-through to the assets held by the master AIF and report on the detailed position-level data at master fund level.

The FCA is now proposing to apply a different interpretation. The proposed rule change will require non-EEA AIFMs to provide full reporting in respect of both the feeder AIF(s), being marketed in the UK and their related master AIFs, following a similar approach to that taken by Belgium, Ireland and Luxembourg. Importantly though, the FCA is not proposing to extend this additional reporting burden to all non-EEA AIFMs, but instead just those non-EEA AIFMs where reporting on the respective feeder AIF is currently required on a quarterly basis.

What does this mean?

This proposed rule change has yet to pass through consultation, and thus it cannot yet be considered as final. However, the consultation paper included the proposed rules so it is clearly the intention of the FCA to adopt these changes. Should this transpire, non-EEA AIFMs will be required to present the additional information to the FCA using the AIF002 Fund-level report via their GABRIEL system. These reports would be presented on the same basis as for the feeder AIFs they currently market in the UK, albeit that these reports will need to contain a significantly increased volume of data, drilling down into the instruments, concentrations and exposures held by the master AIF.

What happens now and when is this likely to apply from?

There will be a six (6) week consultation period (ending on 12 August 2016) whereby members of the industry have the opportunity to give feedback to the FCA on the proposed changes. Subsequent to this, the FCA will consider the feedback received and proceed to publish final rules which we anticipate will be confirmed towards the end of Q3 or early in Q4. As the rules have already been drafted the FCA may be well be seeking to have the rules in place by January 2017. This is the earliest that we would consider it feasible at this point in time for the new rules to take effect.

How can ACA help with your regulatory reporting?

Our European and Technology divisions have developed an award-winning Regulatory Reporting Platform (RR) to provide a holistic and complete end-to-end Annex IV reporting solution for non-EEA AIFMs marketing in the EEA. The RR has already been configured to provide this level of transparency and has reported this data effectively for our clients already registered in Belgium, Ireland and Luxembourg.

About the ACA European Division

ACA Compliance (Europe) is the London-based division of ACA Compliance Group (ACA). Established in 2002, ACA is deemed to be the world’s largest independent compliance consultancy and a leading provider of regulatory compliance products and solutions, cybersecurity and risk assessments, performance services, and technology solutions to financial services firms of all sizes.

The UK team includes former FSA (FCA) and SEC examiners, experienced compliance practitioners from prominent financial institutions, and professionals previously approved by the UK regulator in the Compliance Officer and Money Laundering Reporting Officer functions.

About ACA Regulatory Reporting and ACA Technology Solutions

ACA’s RR platform is a single platform solution designed to help today’s investment management community successfully prepare for and respond to evolving regulatory mandates. ACA’s RR platform was awarded the 2015 HFM European Technology Award for Best Compliance Product.

ACA Technology Solutions is a division of ACA Compliance Group. Our team of financial technologists has real-world industry experience and understands the dynamic needs of today’s investment managers.

For more information, contact:

Andrew Welch
ACA Compliance (Europe) Limited
Andrew.Welch@acacomplianceeurope.com
+44 (0) 207 042 0500

Craig Fitzpatrick
ACA Technology Solutions
cfitzpatrick@acats.com
+1 212-951-1030