Reporting to Regulators
AIFMD Reporting Obligations
AIFMD imposes requirements for information to be reported to regulators on an ongoing basis.
Information to be reported
Under Article 24 of AIFMD, an EU AIFM is required to regularly report to the regulator of its home Member State certain aggregated information on the principal markets and instruments in which it trades on behalf of the AIFs it manages. The AIFM also has to report, for each of the AIFs it manages, the main instruments in which it trades, the markets of which it is a member or in which it actively trades and the diversification of the AIF’s portfolio, including its principal exposures and most important concentrations.
An EU AIFM is also required to provide the following information to the regulator of its home Member State:
- the percentage of each AIF’s assets subject to special arrangements arising from their illiquid nature;
- new arrangements for managing the liquidity of the AIF;
- the risk profile of the AIF and risk management systems employed;
- the main categories of assets in which the AIF is invested; and
- the results of stress tests required by AIFMD in respect of investment risk and liquidity risk.
The regulator of the home Member State could require additional information, including:
- the annual report of each EU AIF and each AIF marketed in the EU;
- a list of all AIFs which the AIFM manages for the end of each quarter; and
- additional information which the home regulator may require to monitor risk effectively.
A non-EU AIFM marketing an AIF it manages in the EU under the NPPR will have to report the information listed above to the relevant regulator in each Member State in which the AIF is marketed.
Feeder AIFs
When reporting information on a feeder AIF in a master/feeder structure, subject to specific requirements issued by particular Member States, it is not necessary to look through to the master AIF’s assets and trading activity. However, according to guidance issued by ESMA to national regulators, national regulators may seek additional information on the master AIF if the feeder AIF and the master AIF are managed by the same AIFM.
Disclosure frequency
The information must be provided to the regulator by the AIFM:
- on a half-yearly basis, if the total assets under management in relation to the portfolio of AIFs managed by it exceed either €100m (if the underlying AIFs use leverage) or €500m (if the underlying AIFs do not use leverage), but do not exceed €1bn for each EU AIF;
- on a quarterly basis, if the total assets under management in relation to the portfolio of AIFs managed by it (excluding non-EU AIFs not marketed in the EU) and/or marketed in the EU exceed €1bn;
- for AIFMs otherwise subject to the half-yearly reporting, on a quarterly basis in relation to those AIFs whose assets under management (on a single AIF basis and including any assets acquired through leverage) exceed €500m; and
- on an annual basis, for unleveraged AIFs whose core investment policy includes investment in and acquiring control of Non-Listed Companies and Issuers.
Article 110 and Article 111 of the Level 2 Regulations set out further detail regarding the above reporting obligations.
ESMA has released a detailed report on reporting obligations under AIFMD which can be accessed here and regularly issues new guidance on reporting obligations as part of the ESMA Q&A on AIFMD, available here. ESMA has also developed specific reporting documents which can be accessed here.
Certain national regulators have released their own guidance on reporting obligations and/or set-up electronic reporting platforms.
Leverage
Please click here for a summary of the reporting requirements in respect of AIFs that employ leverage.
AIFMD II
Article 24 will be substantially modified to expand existing reporting as well as to include new reporting obligations.
Expansion of existing reporting
- The changes will increase the data regulators should receive from AIFMs on markets and instruments in which the AIFM trades on behalf of AIFs, and on exposures of those AIFs, by:
- deleting the “principal” qualifier in the requirement to report on principal markets and instruments in which an AIFM trades on behalf of the AIFs it manages;
- deleting the word “main” in the requirement to report on the main instruments in which an AIF is trading;
- deleting the word “principal” in the requirement to report on the principal exposures (albeit also deleting “and the most important concentrations of each of the AIFs it manages”); and
- including a clarification that the reported information must include identifiers that are necessary to connect the data provided on assets, AIF and AIFMs to other supervisory or publicly available data sources.
- The reporting on risk profile of an AIF will need to include the total amount of leverage employed by the AIF
New reporting obligations
- AIFMs will need to report on delegation arrangements concerning portfolio management and risk management functions, including:
- information on the delegates (including names, domicile or registered office or branch, any close links with the AIFM, their regulatory status and supervisory authority);
- the number of full-time equivalent human resources employed by the AIFM for performing day-to-day portfolio or risk management within the AIFM, and for monitoring delegation arrangements;
- a list and description of the activities concerning portfolio management and risk management functions which are delegated;
- where portfolio management is delegated, the amount and percentage of the AIF’s assets which are subject to delegation arrangements concerning the portfolio management function;
- the number and dates of the periodic due diligence reviews carried out by the AIFM to monitor delegated activities, a list of issues identified and, where relevant, of the measures adopted to address those issues and the date by which those measures are to be implemented;
- where sub-delegation arrangements are in place, certain of the above in respect of the sub-delegates and the activities so sub-delegated; and
- the commencement and expiry dates of delegation and sub-delegation arrangements.
- AIFMs will also need to provide a list of Member States in which an AIF is actually marketed by the AIFM or by a distributor which is acting on behalf of that AIFM.
Technical standards
Further harmonisation and standardisation are expected to come in the form of Regulatory Technical Standards and Implementing Technical Standards to be developed by ESMA and adopted by the European Commission.
UK Implementation
As set out in more detail on the “AIFMD in the UK after Brexit” page, the UK has generally maintained the rules set out in AIFMD as implemented at the end of the Transition Period. As such, broadly speaking, fully authorised UK AIFM are also subject to the reporting requirements set out in this section.