Cordium and IVP launch Annex IV reporting toolkit

24 Apr, 2014

Cordium, the compliance consultancy, is to partner with financial services technology specialist Indus Valley Partners (IVP) in offering an Annex IV reporting service.

The service will enable managers to meet and automate their Annex IV reporting obligations as mandated under the EU’s Alternative Investment Fund Managers Directive (AIFMD) from a purpose-built cloud platform.

Annex IV reporting is based on a complex classification system whereby the frequency of the report is determined by type of investment and Assets under Management (AuM).  AIFMs that manage or market an investment vehicle into the EU will be required to submit Annex IV reports to the relevant national regulators following the first full quarter of AIFM authorisation.

The Cordium/IVP service already helps managers submit the highly forensic Form PF to the US Securities and Exchange Commission (SEC) as required under Dodd-Frank. However, managers have been warned much of Form PF cannot be replicated in Annex IV. One lawyer, speaking in 2013, estimated roughly 60% of the data required for Form PF bore relevance to Annex IV and he warned there were a number of nuances between the two documents.

Form PF filers must collect and collate roughly 2,500 data points and submit this to the SEC on either a quarterly or annual basis depending on AuM. Data required includes exposures by asset class, counterparties, geographical concentrations, leverage, risk profiles, details of investors, liquidity terms, strategies, turnover by asset class, stress test results and Value at Risk (VaR). Despite initial challenges, the majority of Form PF filers have gotten to grips with the process. However, Annex IV is said to be more prescriptive than Form PF in its methodology and calculations.

AIFMD reporting has proven problematic for managers. A study by KNEIP in June 2013 found 85% of alternative investment managers were unprepared for AIFMD reporting.  Forty per-cent of respondents to the same survey said regulatory reporting was their primary AIFMD challenge. A survey in January 2014 of 50 global fund managers by BNY Mellon in conjunction with FTI Consulting found 37% of firms were still unclear as to how they would address their Annex IV reporting obligations.