Today was the latest deadline for private funds registered with the U.S. Securities and Exchange Commission (SEC) to file Form PF. The April 30 deadline impacts hedge funds with assets between $150 million and $1.5 billion and private equity funds with more than $2 billion -- the so-called "annual filers" who will be filing for the first time.
Dileep Bhat, senior manager at NorthPoint Solutions, called it the "last wave of the first run of filers." The first Form PF filing deadline was August 29 last year for funds with more than $5 billion in regulatory assets under management (RAUM). Those funds, plus hedge funds with more than $1.5 billion in RAUM and liquidity funds with greater than $1 billion, must file quarterly.
Bhat estimates the April 30 deadline affected more than 5,000 funds. NorthPoint, which provides software solutions and services to asset managers, hedge funds and service providers, has helped numerous clients to file Form PF to meet the various deadlines to date, Bhat says.
Form PF, which came into effect last year, is the result of new regulation requiring hedge funds, liquidity funds and private equity funds to register with the SEC and submit quarterly or yearly reports to the regulator regarding risk exposures and other data points.
Bhat says funds are getting used to filling out and submitting Form PF. "The toughest part was last August, the first run for the largest hedge funds over $5 billion," Bhat says. "There was not a lot of direction from the SEC and [independent securities regulator] FINRA, and then over time people came to a convention and the SEC published FAQs and answered the main questions. The first round of filing left a lot of room for interpretation."
Jonathan Cohn, principal in the Advisory Group at KPMG, says funds have taken various approaches to how to meet the challenge of compiling the information required for Form PF. "I think what you see is a spectrum from manual on the left side to more fully automated on the right side," Cohn says. One one hand, some funds have "smart folks working in Excel, getting data in the right form, get it translated in the correct markup language FINRA expects. Some [funds] move to more of … an end-to-end, automated fashion."
That has created a niche for service providers that help funds compile the data and provide expertise on the form itself, including fund administrators, technology vendors, law firms and consultancies. While compiling the necessary information to fill in Form PF -- which has different iterations depending on the fund size and type -- has been a data challenge for the so-called private fund advisers that must submit the form, it has become a key business for service providers that help them with the process.
European regulators are also aiming to shed light on the private fund industry, which has long operated without direct oversight by regulators. The Alternative Investment Fund Managers Directive (AIFMD) will require European funds to report in a manner similar to Form PF in the U.S., which Cohn says will highlight "cross-regulatory needs and requirements" for funds. There is a "strong overlap between Form PF and ... emerging European regulation AIFMD," he says. That will result in "clients not only focusing on core, individual regulatory filings, but also looking at horizontal solutions and processes to make it a more holistic process across regulations. We will see in the coming year or two a lot more of that type of thinking; it saves money and reduces risk and streamlines the regulatory filing process."