Costs to Continue for AIFMD Reporting says BNP Paribas Exec

U.K. fund managers are likely to see the costs of Annex IV reporting under the Alternative Investment Fund Managers Directive (AIFMD) to continue after the first wave, says an executive for BNP Paribas Securities Services. These costs go beyond the initial costs of the infrastructure required to be compliant.

On Monday, the U.K. Financial Conduct Authority went live with its AIFMD reporting system, GABRIEL, as fund managers that are first-time Annex IV fillers prepare for the first wave of reporting on October 31.

However, despite the assumption of preparing and building the infrastructure to enable compliant reporting would be a ‘one-off’ cost in reality the costs are likely to continue, according to Hugh Stevens, head of private equity and real estate fund solutions, BNP Paribas Securities Services.

“Speaking to people in the market, particularly UK private equity managers, the costs don’t end after the first wave of reporting. This is because the costs come from the collection of data from various systems,” says Stevens.

“For large managers the costs of setting up the infrastructure for reporting could be in the millions.”

The AIFMD is a pan-European directive that has resulted in some firms that have traditionally not been considered as alternative funds, such as investment trusts, falling into the regulatory scope.

Furthermore the reporting requirements could involve a lot more work than some originally thought. The Annex IV reporting template consist of 41 highly detailed questions with 340 data fields, and requires funds managers to provide a wide range of information including details on instruments traded, assets under management and liquidity, borrowings, stress test results and leverage. Much of this data had not been previously requested by regulators.

BNP Paribas Securities Services launched an outsourcing reporting service on Thursday to target hedge funds, private equity and real estate funds.

Stevens finds, “It is not just the case of collecting the data but making sure it is able to be audited and has a risk framework around the operational tasks. This is where we see an opportunity of demonstrating to the regulators and fund directors that the data is not only complete, but are being produced in an audit-able environment.”