The drive for better trade transparency led to the introduction of the MMIF reporting in 2014, which aims to capture a comprehensive overview of all transactions and positions of funds. The submission must be made on a quarterly basis for all Undertakings for the Collective Investment of Transferable Securities (UCITS) and hedge funds resident in the Republic of Ireland. The submission to the statistics division of the Central Bank of Ireland (CBI) is required to be made within 12 working days after the last day of the reference quarter (T+12).
With the introduction of the MMIF requirements, the Irish funds industry anticipated a more fluid and systematic process as it replaces the Other Financial Intermediaries (OFI1) reporting, which caused operational challenges for many fund administrators. The information requested under MMIF in comparison to OFI1 is on a much wider scope, capturing details such as profit and loss flows on an accrual basis, dividends, interests, rents and other income.
The MMIF requirement for more detailed data and a tighter reporting timeline has, however, introduced new challenges to fund administrators. In a survey conducted by RR Donnelly, they provided feedback that the regulatory burden has been costly and demanding on their internal resources. More specifically, hedge fund administrators have complained that reporting for these kinds of funds is far more complicated under MMIF than under the previous OFI1 reporting regime. The reason for this is because CBI requires much more data at the transaction level. There is an increase in the number of data points needed, the structure in which the data is represented and the granularity to be reported. Because CBI has validation checks based upon opening balance, transaction activity and closing balance of the fund, large accrual changes are causing hedge funds to fail the submission process.
Besides the challenges with data gathering, fund administrators have expressed concerns around communication with CBI. They would like an improvement in the communication level around reporting deadlines and also giving more notice in regards to changes with MMIF. An improvement to the entire process would benefit fund administrators greatly as a failure to submit fund information accurately and on time could result in a fine of up to €200,000.
Alternative Investments, Fund Administration, Regulation