December 2012 Form PF filing will be bigger challenge, says fund admin

Fund AdministrationLegalOperational RiskOutsourcingRegulation
03 Oct, 2012

The December 2012 filing deadline for Form PF will be a bigger challenge than the June filing, while more work needs to be done to customise the entire process for hedge fund clients, a major fund administrator has said.

“The August 2012 deadline for managers running more than $5 billion AuM went very smoothly. Because of the sheer number of managers doing the December 2012 filing, it will be more of a challenge but we believe we are well adjusted to meeting that challenge,” said Mike Megaw, senior vice president and managing director for alternative assets at the newly merged SS&C GlobeOp in New York.

Hedge funds managing between $150 million and $5 billion must submit Form PF to the SEC by December 2012. The 50 page document will then be passed onto the Financial Stability Oversight Board, the body tasked with monitoring systemic risk under Dodd-Frank.

“One area where improvements need to be made is customising Form PF for certain clients. Given Form PF’s automation, scope and detail, there are some questions which aren’t entirely relevant for certain managers and this can be a challenge when managers have to answer these questions. However, the SEC has been very helpful and responsive to the questions we have asked pertaining to Form PF,” he added.

Some managers, particularly smaller ones, have also outsourced substantial chunks of Form PF work to fund administrators leading to concerns they are overly dependent on service providers.

“Managers should remember that they are responsible for the content of the filing.  The manager needs to have confidence that any service providers are capable, and the manager should understand what exactly the administrator is able to do.  Given the nature of the filing, the manager will need to stay involved at some level beyond simply selecting and monitoring the administrator,” said David Vaughan, partner at international law firm Dechert in New York.

Managers trading certain swaps will also be required to register with the CFTC and become National Futures Association (NFA) members by December 31, 2012 following the repeal of Regulation 4.13(a) (4) which had historically provided managers with an exemption to registering.

SS&C GlobeOp is currently in the process of developing a toolkit to help managers with this latest regulatory hurdle. “We are currently developing a solution, and we are leveraging a lot of what we have with the Form PF toolkit, because a lot of the data the CFTC is asking for is similar to what managers are submitting to the SEC,” said Megaw.

SS&C has had a busy 2012, having acquired GlobeOp in May 2012 for $920 million. The firm also announced last week that it had acquired Gravity Financial, a Massachusetts-based fund administrator with 40 clients.

DechertFinancial Stability Oversight BoardForm PFGlobeOpSECSS&C