CP12/32: Implementation of the Alternative ... - BVCA admin

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CP12/32 Implementation of the Alternative Investment Fund Managers Directive Annex X potential policy exclusions so we propose that a firm should maintain adequate own funds to cover any exclusions in the insurance policy. Liquid assets requirement 5.32 Article 9(8) requires own funds to be invested in liquid assets or assets readily convertible to cash in the short term and not in speculative positions. It is clear from AIFMD’s wording that the requirement must apply to the own funds required by Articles 9(3), 9(5) and 9(7). We propose not to apply it to any own funds requirement in relation to Articles 9(1) and 9(2) as AIFMD only refers here to initial capital. 5.33 We propose that a proportionate interpretation of the term ‘assets readily convertible to cash in the short term’ is those that could be realised for cash within one month. We have suggested, as guidance, that acceptable assets include cash, readily realisable investments that are not held for short-term resale and debtors. The firm could also include any other assets that fall within the definition, but would need to be able to demonstrate that it could practically realise the relevant asset within one month. 5.34 Article 9(10) states that a UCITS management company that manages at least one AIF must also comply with the liquid assets requirement and this will be in respect of its own funds based not only on its AIFs but also on the UCITS that its manages. Although AIFMD does not apply to a UCITS management company that does not manage any AIFs, we propose to apply a liquid assets requirement to such a firm. In our view this is an appropriate and proportionate approach in the circumstances, as the requirement applied to a UCITS management company that manages at least one AIF should be the same as that applied to such a company that manages no AIFs, because the risks addressed by the requirement are the same. 5.35 Currently, a UCITS firm is subject to a similar requirement, as Table 2.2.1 in UPRU requires it to deduct illiquid assets in computing its financial resources. As this provision is not required by the UCITS Directive, we propose to remove it. A UCITS investment firm which is subject to GENPRU and BIPRU is currently required either to deduct illiquid assets or material holdings when computing its Pillar 1 capital requirement. Q4: Do you agree with our proposed approach to professional negligence risks and the liquid assets requirement? Q5: Do you agree with our intention to apply the liquid assets requirement also to UCITS management companies that do not manage any AIFs? 38 Financial Services Authority November 2012
November 2012 Financial reporting forms CP12/32 Implementation of the Alternative Investment Fund Managers Directive 5.36 The proposed amendments outlined above give rise to consequential changes to the SUP 16.12 financial reporting rules and forms and the supporting guidance notes. In particular we propose that the regulated activity of managing an AIF will be classified as regulated activity group (RAG) Number 4. 5.37 We propose that a CPM firm should complete a new reporting form, FSA066, which demonstrates whether it meets the capital and PII requirements of IPRU (INV) Chapter 7. It must also complete: FSA029 (balance sheet), FSA030 (income statement), FSA039 (client money and client assets), FSA040 (CFTC) and (if it is a UCITS management company) FSA042 (UCITS) and submit them to us on a quarterly basis within 20 business days. 5.38 The firm will also be required to submit the annual report and accounts and solvency statement within 80 business days of the accounting reference date. 5.39 We propose that a CPMI firm must complete a new reporting form FSA067 which provides supplementary information, in addition to the other returns currently required from a BIPRU limited licence firm, to demonstrate that the firm complies with the capital and PII requirements that derive from AIFMD. 5.40 We will no longer require firms to submit FSA 041 (Asset Managers that use Hedge Fund Techniques Report) as this information will in future be obtained through other reports. 5.41 FSA036 (Capital adequacy (for UCITS firms subject to UPRU)) will also no longer be required, as this relates to requirements in UPRU, which is being deleted. Q6: Do you agree with the proposed changes to SUP 16.12 and that the proposed new forms and guidance notes will provide us with sufficient information to assess whether firms are complying with the capital and PII requirements? Financial Services Authority 39
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Annex 2 List of consultation questi
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Annex 2 November 2012 CP12/32 Imple
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ALTERNATIVE INVESTMENT FUND MANAGER
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Annex A Making the Investment Funds
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3.2.5 R An AIFM must, for each AIF
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Page 9 of 91 Appendix 1 (6) the agg
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Page 11 of 91 Appendix 1 (4) the id
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[Note: article 15(1) of AIFMD] this
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(1) a full scope UK AIFM of: (a) a
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experienced; Page 19 of 91 Appendix
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Page 21 of 91 Appendix 1 by the fac
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Page 23 of 91 Appendix 1 3.11.5 G T
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(Own funds requirement). [Note: art
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supplements the meaning of financia
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instruments remain in its custody;
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supplementing this section] 4. Comm
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Annex B Amendments to the Glossary
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collective portfolio management fir
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Page 37 of 91 Appendix 1 non-listed
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BIPRU 730k firm Page 39 of 91 Appen
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… Page 41 of 91 Appendix 1 (e) (i
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esources only at excessive cost. Pa
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Single Market Directive … Page 45
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Page 49 of 91 Appendix 1 7.1.7B In
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[Note: paragraph 1(c) of Annex II o
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[Note: paragraph 1(k) of Annex II o
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[Note: paragraph 1(r) of Annex II o
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Page 59 of 91 (2) the fixed overhea
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Page 61 of 91 Appendix 1 amount of
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Types of investment firm: BIPRU 50K
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The following text is new and is no
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Page 67 of 91 Appendix 1 (1) at the
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Page 69 of 91 Appendix 1 so that th
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TABLE 7.4 PART I A firm must calcul
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Note consistently in respect of any
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initial capital (see item 5) if the
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Form of qualifying subordinated loa
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Annex H Amendments to the Supervisi
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Descriptio n of data item Annual re
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… Data item SUP 16.12.12R, unless
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indicated otherwise. Data item Firm
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client assets … Page 87 of 91 App
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… Data item SUP 16.12.23R, unless
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FSA066 and FSA06 are added - see fo
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Liquid assets test 32 Liquid assets
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Professional negligence capital req
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is not listed, select ‘Other’.
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FSA067 Capital adequacy - supplemen
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PII capital requirement 5A This is
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External validations Validation Dat
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