AIFMD requires alternative fund managers – which includes hedge funds, private equity and real estate funds – to report certain information regularly to national supervisors. ESMA says that the new guidelines are designed to clarify what is needed and will help regulators have a more ‘comprehensive and consistent’ oversight of fund managers’ activities. The Association has also proposed that periodic reporting requirements are introduced, including such information as Value-at-Risk or the number of transactions carried out using high frequency algorithmic trading techniques.
The new guidelines say that alternative fund managers need to disclose the breakdown of their investment strategy, the principal markets and instruments employed by the fund manager and the total value of assets under management of each fund. They will also need to provide information on turnover, the key exposures and portfolio concentrations. The proposed periodic reporting requirements would include risk measures such as liquidity and leverage. ESMA says it will also provide a template for reporting to individual country regulators.
Steven Maijoor, ESMA Chair, said that the guidelines and opinion would help standardise reporting across the EU and would facilitate the exchange of information between national regulators, ESMA and the ESRB: “One of the key objectives of the AIFMD is bringing the alternative fund world under supervision thus providing more transparency to investors and regulators. As the AIFMD came into force in July, both alternative investment fund managers and national supervisors now need to prepare for their regulatory filings as it is these reports which will enable supervisors to monitor the systemic risks of alternative investment funds.”
The Guidelines will now be translated into the official languages of the EU members. Domestic regulators will then have two months from the date of the publication of the translations on ESMA’s website to confirm to ESMA whether they comply with the Guidelines by incorporating them into their supervisory practices.
