The deadline this weekend for most alternative investment managers to report under transparency rules takes place after regulators overhauled their systems to avoid the fiasco of the first reporting round a year ago.
Annex IV reports, which are a requirement of the Alternative Investment Fund Managers Directive (AIFMD), contain about 300 data points and the filing process was sent into disarray last year when systems – such as the Financial Conduct Authority (FCA) Gabriel tool – couldn’t cope.
However, a Luxembourg-based reporting expert told Funds Europe
that “Gabriel is now stable”.
Lee Godfrey, deputy chief executive at Kneip, a provider of regulatory reporting and investor disclosure services, says fewer Kneip staff are needed to support reporting this year and there is less need for overtime as a result of better preparedness by regulators.
This is in contrast to last year when weekends had to be worked to overcome problems with reporting and filing systems on the regulatory end.
Tom Pfister, head of regional market management at Confluence, a regulatory data management provider, said a typical problem with regulatory systems last year would be a ‘Fail’ message in response to data entered into a data field – but with no explanation.
Asset managers and third-party servicers involved in Annex IV reports found discrepancies such as inconsistencies in base currencies between the UK and Europe, different versions of reporting templates, and a lack of clarity about how assets under management might be totaled, said experts.
“I do not see reporting as being a problem this year,” Godfrey said. “Our clients have got more feedback about required content from regulators”.
An FCA spokeswoman said: “During 2015 we completed a full upgrade of the Gabriel system in preparation for the increase in the number of firms using the system to report to us, including for alternative investment funds. As part of the upgrade work we have undertaken significant testing of the system and improved our internal processes, resulting in a more stable and efficient system.”
A spokesman for the Luxembourg regulator, the CSSF, said the authority has designed an application that “automatically treats” reports.
“The treatment of these reports is carried out using the controls specified by ESMA [Europe’s financial ‘super regulator’], as well as the CSSF's own controls. Once all of the controls have been carried out, the CSSF transfers the reports to ESMA. The flow of these reports to ESMA has accelerated since December 2015.”
He added that the CSSF has also published a Frequently Asked Questions concerning obligations and general implementation of the AIFMD.
“This document is updated according to feedback received from the industry, or according to the CSSF's own experience gained during the course of 2015. In addition, the CSSF has a reminder procedure in place for those entities that do not deliver the required reports within the deadlines."
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