The document outlines the implications of the AIFMD compliance requirements post-deadline, detailing what the FCA expects from AIFMs regarding governance, risk management, and reporting. It emphasizes the importance of transparent reporting and proper valuation procedures, including Annex IV reporting obligations for various AIFM categories. Additionally, it offers insights into assistance available for both simple and complex reporting processes.

1. Making AIFMD business as usual
Ashley Kovas, Head of Funds
Donal Martin, Consultant
9 October 2014

2. 2
What we’re looking at today
•The AIFMD deadline has passed
•What the FCA want
•What does compliance involve?
•Some detailed areas to consider
•Annex IV reporting

3. 3
The AIFMD deadline has passed
•New applicants: AIFM must comply from the date of authorisation
•Transitionals: AIFMs who applied for VoPs should have complied from the date of approval or 22 July – whichever was first.
… and the FCA are likely to be checking up on implementation

4. 4
What the FCA want
Business model and strategy
•How you make your money
Culture
•Leadership, strategy, decision-making and challenge, controls, performance management and reward
Front-line business processes
•From product development to complaints handling
Systems and controls
•Reinforce the right culture and business practices
Governance
•The role of the people responsible for running the firm

5. 5
What does compliance involve?
For all AIFMs
•Authorisation and registration
•Reporting
•To regulator
•To customers
•Annual report
For full scope AIFMs
In addition, you need to have policies and procedures for:
•Risk management
•Valuation
•Conflict of interest
•Liquidity management
•Delegation
•Investor disclosure
•Due diligence
•Remuneration
•Leverage

6. 6
Risk management
Full scope AIFMs need:
•A permanent risk management function
•Risk management policies and procedures
•Published risk profile
•Regular review of risk management systems
•Reports to the Board
For each AIF it manages the AIFM must:
•Identify all relevant risks
•Establish risk limits for the AIF taking account of all relevant risks

7. 7
Valuation
Full scope AIFMs need the following procedures:
•Proper and independent valuation
•Net asset value
•Disclosure of valuation

8. 8
External valuers
•Who are they?
•Appointment process
•Written guarantees obtained from the external valuer
•Exchange of information
•Ongoing due diligence

9. 9
Assets under management
For each AIF the AIFM needs to:
•Identify portfolio of assets
•Value each asset
•Include all assets acquired through leverage
•Convert derivative positions

10. 10
Assets under management – examples
Interest rate swaps
•Notional contract value of the swap
Contracts for differences
•Price difference the owner of the CFD has to pay
So again, AUM is likely to be larger
Convertible bonds (embedded derivatives)
•number reference shares x market value of reference shares x the delta
number of contracts
x
market value of the reference instrument

11. Annex IV reporting

12. 12
Who is caught?
•Full-scope UK AIFM
•Small authorised UK AIFM
•Small registered UK AIFM
•Third country AIFMs

13. 13
What does Annex IV reporting involve?
Transparency…
•reporting about you
•reporting about your funds

14. 14
Why do you need to do this?
It’s part of the FCA’s strategy
•Regulatory reporting is part of the FCA’s supervision strategy and transparency information is a key element of this.
It helps the financial system
•Information is used to protect and enhance the integrity of the financial system and secure consumer protection.
You have to!
•Managers are required under the Directive to report information (transparency information) to the FCA or other NCA(s).

15. 15
What does the FCA need?
Two reports submitted electronically via GABRIEL :
AIF001 – Manager Report
•AIFM specific information
•FRN is used to identify each AIFM
AIF002 – Fund Transparency Report
•AIF specific information
•PRN used to identify each AIF

16. 16
Reporting obligations – quarterly
AIFM
Reporting period end
Submission date
Full Scope AIFM
•AUM exceeds €1 billion
Or
•AUM of one or more AIFs exceeds €500m SUP 16.18.4(3)(b)
SUP 16.18.4(3)(c)
As at:
•31 March
•30 June
•30 September
•31 December SUP 16.18.5R(3)
30 April
31 July
31 October
31 January

17. 17
Reporting obligations – half-yearly
AIFM
Reporting period end
Submission date
Full Scope UK AIFM
•AUM exceed either €100 million
OR
•AUM exceeds €500 million (unleveraged and no redemption rights for 5 years)
BUT
•AUM is less than €1 billion.
SUP 16.18.4(3)(a)
As at:
•30 June
•31 December SUP 16.8.5R(2)
31 July
31 January

18. 18
Reporting obligations – annually
AIFM
Reporting period end
Submission date
Full Scope UK AIFM:
•unleveraged AIF which invests in non-listed companies and issuers in order to acquire control SUP 16.18.4(3)(d)
As at:
•31 December SUP 16.18.6R SUP 16.18.7D
31 January
Sub-threshold AIFMs
•small authorised AIFMs
•small registered AIFMs SUP 16.18.6R SUP 16.18.7D

19. 19
Helping you with Annex IV reporting
For less complex structures or lower assets under management
•You can input to direct to GABRIEL
•We can advise and help with data input

20. 20
Helping you with Annex IV reporting
For more complex structures or higher assets under management
•We can handle reporting on your behalf
•We can advise and help at each step
Simplified reporting template
Validation, error check and audit trail to minimize errors
Generates and submits xml filing straight to NCA
Capable of multi-jurisdictional and multi currency filings

21. 21
How it works
•Bovill templates issued to you
•We advise on technical queries and help complete templates
•We validate your completed template through the system
•We work through queries and return form for your approval
•We submit direct to the necessary NCAs

22. 22
Making AIFMD business as usual
•AIFMD should be part of every day business
•Take time to do the correct calculations
•Understand what you need to report, how and when

23. 23
If you’re stuck
•Speak to your Bovill contact
•Have a drink with us after the briefing
•Give us a call +44 20 7620 8440
www.bovill.com