On 1 October, the European Securities and Markets Authority ("ESMA") published its final guidelines (the "Guidelines") on the reporting obligations to national competent authorities imposed on Alternative Investment Fund Managers ("AIFMs") under articles 3 and 24 of the Alternative Fund Managers Directive ("AIFMD or the "Directive").
The intention of these new detailed regulatory reporting requirements is to enable competent authorities to monitor and manage potential systemic risk to the financial markets.
The detailed requirements of these reporting obligations are contained in EU Regulation 231/2013 (the "Regulations"). The reporting obligations require AIFM to provide details of:
the main instruments it is trading on behalf of the Alternative Investment Funds ("AIFs") it acts for; the markets of which it is a member or upon which it actively trades; the principal exposures and most important concentrations of each AIF it manages; the diversification of the each AIF's portfolio (including its principal exposures); the percentage of each AIF's assets subject to special arrangements arising from their liquidity; the current risk profile of each AIF and the risk management systems employed by the AIFM to manage the market, liquidity, counterparty, operational and other risks; the main categories of other assets in which the AIF is invested; and the stress testing performed in line with the Directive. ESMA issued its Guidelines in order to seek to standardise the interpretation of the reporting obligations under the Regulations within the EU. These include some significant clarifications including:
Transitional Arrangements ESMA has now confirmed that existing AIFMs may take account of the transitional periods in the Directive for the purpose of determining when to make their first reports. This is a welcome clarification as it is less onerous than had been anticipated. Reporting Periods The reporting periods are based upon the calendar year. They end on the last business day in March, June, September and December of each year. Accordingly, AIFMs which are subject to yearly reporting obligations will report as of the last business day of each year. AIFMs should start reporting to their national competent authority ("NCA") as from the...