CACEIS NEWS 38 EN

6 caceis news - No. 38 - June 2014

Turnkey AIFM regulatory reporting compliance services

NEW BUSINESS

TWO LEVELS OF TAILORED REGULATORY REPORTING SERVICES

CACEIS is market leader in Germany for depositary services to closed-ended funds following numerous mandate wins Over the past 12 months, CACEIS was awarded some 24 new depository service mandates in Germany in the closed- ended fund sector. Closed-ended fund managers in Germany have recently undergone a period of restructuring led by the AIFM Directive which was implemented in July 2013. CACEIS offers a range of fully-compliant AIFMD services to private equity and real estate funds including aviation, renewable energy and shipping containers. AIFMD restructuring, together with the ongoing trend of outsourcing non-core business activities, has opened up many new opportunities for CACEIS to provide support services that go beyond traditional fund depositary services €16bn in assets for 16 real estate investment companies AXA Investment Managers Deutschland GmbH AXA Investment Managers Deutschland GmbH (AXA IM Deutschland) has decided to engage CACEIS as depositary for its entire existing real estate open- ended mutual and special funds business in Germany, with a total fund volume of some €2.5bn Sal. Oppenheim jr. & Cie. Company CACEIS provides depositary services for real estate and other physical assets in Sal. Oppenheim’s open- and closed-ended funds in Germany. Sal. Oppenheim and CACEIS are working closely together to ensure all concerned funds will be migrated to CACEIS by the end of 2014, subject to the approval of clients and institutional end-investors. The migration volume amounts to some €12bn in physical assets

A PARTIALLY OUTSOURCED SOLUTION

T he AIFMD presents develop- ment opportunities for asset management companies, as well as stringent provisions. Of these, regulatory reporting is one of the chief concerns of asset management companies due to the large number of pieces of information required. The AIFMD subjects AIF managers - whether AIFM authorised or not - to new periodical reporting require- ments concerning their investments, leverage and exposure to regulators when they manage or distribute AIFs within the European Union. One of the main aims of AIFM regulatory reporting is to allow for the identifi- cation and monitoring of sources of systemic risk by European regulators. The European Securities and Markets Authority (ESMA) plays a predomi- nant role in the definition of reporting requirements and their application. It provides regular clarification about reporting standards, published in its October 2013 final guidelines on the comprehensive regulatory reporting required under AIFMD. The national regulators in the European Union in- clude these reporting requirements in their supervisory practices. The ESMA adopts a pragmatic and flex- ible approach, for example taking ac- count of AIFM approval dates to set the initial reporting date. AIFM re- porting is common to all AIFMs and AIFs and includes three main catego- ries of information: firstly, reporting at the level of the AIFM with identi- fication data and information about their main markets, instruments and meet the requirements of the new regulation while taking advantage of opportunities. REGULATORY REPORTING REQUIREMENTS CACEIS is investing heavily to help its clients to comply with the AIFM directive. This allows them to

The first level is targeted at asset management companies whishing to remain in control of the reporting production process. Within this framework, CACEIS is able to provide the AIFMs with data (assets under management, exposure of the AIFs or compartment calculated using the gross method, exposure of the AIFs or compartment calculated using the commitment method and calculation of leverage) to allow for the production of AIFM reporting. CACEIS can also provide validated reports ready to be sent to the supervisory authority, accompanied by the information needed for reporting at the level of the AIFM. The asset management company, or its service provider, produces and sends the report to the supervisory authorities. The second level of service includes complete preparation of reports (302 fields for AIFs and 38 for the AIFMs), as well as checking, monitoring of dates and sending reports to the supervisory authorities as part of a technical delegation given by the asset management company, which Reports are validated by clients before they are sent. CACEIS then forwards reports in the format required by each local authority and deals with any rejections. Many clients in various parts of Europe in which CACEIS operates opt for this service. remains responsible with regard to the supervisory authorities. A COMPLETE REPORTING SOLUTION

NATHALIE POUX-GUILLAUME, Product Manager, CACEIS

assets under management; secondly, detailed reporting at the level of the AIF, with in addition to identification data, information about exposure and concentration, investors, risk pro- files, liquidity, markets and counter- parties; thirdly, specific reporting if significant use is made of leverage. Practically, some information needs to be consolidated at the level of the AIFM, while other information needs to be codified and formatted accord- ing to the requirements of the regu- lator, and some information needs to be calculated. The nature and frequency (quar- terly, half-yearly or yearly) of re- porting requirements depend on the asset threshold of AIFs managed by the AIFMs and whether or not they make use of leverage. The ESMA recommends that the initial report- ing period begins on the first day of the quarter following accreditation of the AIFMs and ends on the last day of the reporting period. FINAL STAGES The deadline for AIFM authorisa- tion applications is 22 July 2014 and the first quarterly regulatory reporting deadline for France and Luxembourg is 30 October 2014. AIFMs are entering the final stages for complying with ESMA report- ing requirements. Adapting their

systems and organisational struc- ture to these demands takes up a great deal of resources and time. It also requires the analysis of numer- ous pieces of data to be collected and consolidated, as well as defin- ing calculation rules, setting up the reporting process and also the ability to communicate with differ- ent supervisory authorities in XML format. A dedicated regulatory re- porting department is in charge of processing and control. CACEIS offers two levels of ser- vices tailored to client requirements and allowing them to comply with the AIFMD. The Group has cutting- edge IT systems able to collect and consolidate data, perform the various calculations and connect to the different supervisory authori- ties. Its product managers and fund structuring teams are involved in various marketplace groups where they track regulation and standard changes, different interpretations and local adjustments. Its fund data and accounting analysts are actively involved in the process. CACEIS’s teams committed to cli- ents run tests with them and the national competent authorities to ensure that the reports produced comply with the various standards before the launch date

Highlight

AIFMD, a charter governing the role of the external valuer

On 9 th April 2014, at the French Association of Securities Professionals (AFTI) conference in Paris, Carine Echelard , Managing Director, CACEIS in France, discussed the AIFMD framework and highlighted the aims of the professional conduct charter for external valuers (EVs). The purpose of this document is to: ▷ Contribute to establishing a formal relationship between the EV and the manager of AIF; ▷ Clarify the requirements governing the asset valuation tools and methodologies used by EVs; ▷ Answer questions about independence, ethics and compliance principles applicable to EVs. CACEIS contributed to the drafting of this charter and complies with it.