The challenges of AIFMD

By: Giles Smart and Alastair Hewitt

SS&C recently held two master classes on the Alternative Investment Fund Managers Directive (AIFMD) – “Addressing the Challenges of a Filing” and “Addressing the Challenges of Review”. These sessions were delivered by SS&C’s regulatory services team, which has serviced more than 650 Annex IV filings across 15 jurisdictions.

AIFMD – Addressing the Challenges on a Filing

This master class examined the current AIFMD regulatory landscape and the challenges facing a manager in producing a fit-for-purpose dataset. It went into more detail on four of the more contentious questions; those that were open to interpretation, and inherently complex.

AIFMD – Addressing the Challenges of Review

This master class considered the future landscape of AIFMD reporting, and highlighted the key components of a robust and repeatable oversight function. SS&C’s regulatory experts suggested a framework for reviewing output, delivering maximum assurance of accuracy and identifying impactful errors as early as possible.   

The challenges of AIFMD

AIFMD is a European Union directive that established a regulatory and supervisory framework for alternative investment fund managers (AIFMs).

Annex IV is a significant reporting burden for most managers, with ambiguity and complexity coupled with time pressure. The European Securities and Markets Authority (ESMA) has provided standardization of content and structure across jurisdictions. Nonetheless, national competent authorities (NCAs) have individual validation rules, different submission mechanisms and their own interpretations of the ESMA guidance. This fragmentation poses a significant challenge in Annex IV filing, especially where a manager files in multiple jurisdictions.

The reporting regime will continue to evolve in an environment of political uncertainty (e.g. “Brexit” and regulatory reform in the United States). SS&C sees three main areas of change over the next one to two years:

  • Refinement of requirements: there are still a number of question sets that are open to interpretation, and further guidance is likely to narrow the range of methodologies.
  • Increased scrutiny: as the filing process matures across member countries, and now regulators have had time to bed in systemic checks at an industry level, increased attention will be paid to the content submitted. Accuracy of the filing will therefore become ever more important.
  • Increased scope of funds:  NCAs are increasingly using their discretion to mandate non-EEA AIFMs to report associated master funds in addition to their EU-marketed feeders.  This increased scope reinforces the readiness of the NCAs to examine the content of a filing.  

SS&C’s regulatory services group has over 90 regulatory analysts servicing over 500 clients across all regulations. For more information, please contact solution@sscinc.com.