AIFMD Annex IV Reporting as a Service

AIFMD's reporting requirements to investors and to regulators, which where already quite substantial under the original EU Directive have been further strengthened by the recent ESMA guidelines which provide clarifications to no less than 60 detailed reporting sections. In particular, analytical reporting on all types of risk, including market, liquidity, counterparty, and concentration risk lie at the forefront of the new requirements. These are currently being transposed at national level within the EU, while several non-European regulators are also configuring their own adapted versions.

Our purpose is to provide a practical and cost-effective solution to the above complex problem. Therefore our overall offering includes the following important services:

• Collection of Raw Data through interfacing with all relevant sources
• Extensive Data Consistency checks & Reconciliations
• Native Risk Engine for producing all Risk sections
  • Provision of instrument-level statistics required by the risk engine, such as, Instrument definition, price feeds, instrument risk statistics. These go through extensive consistency tests.
  • Design & Execution of Stress Tests
  • Provision of risk consultants to verify the consistency & plausibility of risk results
• Multiple output formats, including ESMA-complaint XML, PDF, Excel…

Cloud servers, Web clients: Avoidance of IT effort & costs, with choice of Data Center in Europe, US, or Asia. Nevertheless, a standalone in-house installation is also possible if ultimate flexibility is a requirement.

Challenge #1: Diverse information from multiple sources

AIFMD reporting relies on diverse raw information, which includes Trading Information, Fund and Fund Manager Identification Information, Investors’ information, Controlled Structures & Dominant Influence related information, Financial Statements’ distinct line-items, Collaterals, Bank Transactions, Margin Requirements.

SYSTEMIC fully undertakes this tedious data collection exercise, which requires the coordination of the fund's service providers and the deployment of automatic interfaces for the secure collection of all required information and subsequent reconciliation.

Over the years, we have successfully built hundreds of such interfaces with multiple service providers including Banks, Prime Brokers, External Valuation Agents, Administrators, Compliance Officers, and of course Risk Managers.

Challenge #2: Analytical Risk sections

AIFMD’s risk sections are the most demanding, as besides raw information they also require algorithmic calculations depending on the type of fund. These range from Liquidity, Counterparty, Concentration, Stress Testing which are applicable to all types of Alternative Funds, to Net FX Delta, Net commodity delta, Vega exposure, and VaR which are applicable to several Hedge Funds.

Our platform is much more than a reporting system: Risk management is our core expertise; therefore our systems are capable of natively producing all relevant risk sections required by AIFMD:

• Disclosure to Competent Authorities
  • AIFM Identification Information
  • AIFM Total AuM, Principal Markets and Main Instruments
  • List of managed AIFs
  • AIF identification information
  • Principal Exposures and Most Important Concentration
  • Instruments Traded and Individual Exposures
  • Risk Profile (Market, Counterparty, Liquidity, Borrowing & Exposure, Operational, Stress Testing…)
  • Risk reporting for Leveraged funds
  • Stress Testing Results

• Disclosure to Investors
  • Risk Profile (similar to above)
  • Risk Limits
  • Leverage-related additional information

Challenge #3: XML output

ESMA has proposed to use a standardized file format ("XML"), instead of the more common PDF or Excel reporting. This will allow both Regulators and Investors to easily interpret, aggregate, and manipulate information coming from different funds (for example to measure "Systemic" risk). We produce XML and other report formats for a number of jurisdictions and regulator types.