The challenges of AIFMD

Giles Smart and Alastair Hewitt

The Alternative Investment Fund Managers Directive (AIFMD) is a European Union directive that established a regulatory and supervisory framework over hedge funds, private equity funds, real estate funds, and other alternative investment fund managers (AIFMs). To fulfil the reporting requirements of the AIFMD, AIFMs must file an Annex IV report. This report is comprised of a multitude of questions and static data points, analysing a fund’s investment portfolios, exposures, leverage ratios, liquidity, and risk analysis.

Unsurprisingly, Annex IV poses a significant reporting burden for most managers, with ambiguity and complexity coupled with time pressure. The European Securities and Markets Authority (ESMA) has provided standardization of content and structure across jurisdictions. Nonetheless, National Competent Authorities (NCAs) have individual validation rules, different submission mechanisms and their own interpretations of the ESMA guidance. This fragmentation poses a significant challenge in Annex IV filing, especially where a manager files in multiple jurisdictions.

The reporting regime will continue to evolve in an environment of political uncertainty (e.g. “Brexit” and regulatory reform in the United States). As it evolves, we see three main areas of change over the next one to two years:

  • Refinement of requirements: there are still a number of question sets that are open to interpretation, and further guidance is likely to narrow the range of methodologies.
  • Increased scrutiny: as the filing process matures across member countries, and now regulators have had time to bed in systemic checks at an industry level, increased attention will be paid to the content submitted. Accuracy of the filing will therefore become ever more important.
  • Increased scope of funds: NCAs are increasingly using their discretion to mandate non-EEA AIFMs to report associated master funds in addition to their EU-marketed feeders.  This increased scope reinforces the readiness of the NCAs to examine the content of a filing.

In light of AIFMD, we recently held two master classes: “Addressing the Challenges of a Filing” and “Addressing the Challenges of Review”. These sessions were delivered by our regulatory services team, which has serviced more than 650 Annex IV filings across 15 jurisdictions.

SS&C’s regulatory services group has over 90 regulatory analysts servicing over 500 clients across all regulations. For more information, please contact

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s