The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Form PF’s Final Rules Reduce Tension for Fund Managers

The final rules of Form PF announced last week by the SEC have opened up a whole new era for hedge fund and private equity businesses, which will now be forced to disclose more information to the US government than previously required. As such, each entity should plan how they will address the Form’s requirements carefully, according to Kinetic Partners, a global professional services firm to asset management, investment banking and broking industries.

While the rules of Form PF require managers to now disclose more information to the Securities and Exchange Commission as outlined in the Dodd-Frank Reform Act, the final rules will also make it easier for them to report earnings than outlined in the original rules. One of the significant differences that the SEC has made in comparison to the Form’s original version is the Assets under Management (AUM) at which private fund advisors must report, which was raised from $1 billion to $1.5 billion.

Advisors will also now have a 60-day reporting deadline as opposed to the 15-day deadline that was initially proposed. In addition, Form PF will also take effect later than originally intended with advisors with over $5 billion AUM, the first to be affected, having to report in the middle of 2012.

Form PF applies only to private funds managed by registered investment advisers, registered commodity advisers and registered commodity pool operators. In particular, the three types of private funds that are covered include hedge funds, liquidity funds and private equity funds.

Advisers will need to understand numerous aspects of the Form PF including issues regarding related persons and the difference between reporting for individual funds and reporting for fund structures (master feeder, mini-master, parallel). It is essential that advisers plan ahead and perform a proper impact assessment, evaluate the necessary modifications to their existing systems, and communicate the impact of the filing of Form PF to all necessary parties.

“Form PF, for the US regulators, will become the new ADV and it will provide the examination staff and possibly the enforcement staff with a road map of how and what each fund is doing,” said Kevin Duffy of financial advisory firm Kinetic Partners. “It is imperative that each fund’s manager takes the time to seek professional advice to make sure that the initial filings are letter perfect and conform to the regulator’s expectations.”

The primary purpose of the 44-page Form PF is to collect information for the Financial Stability Oversight Council (FSOC) so that it may assess whether certain investment advisers possess inherent financial systematic risk. Therefore, it is possible that the FSOC may request additional information from certain filers based upon the information provided on Form PF.

Mr. Duffy added, “Although imperfect, the newly revised Form PF does provide each fund with ample time to comply with the legal directives now being administrated by the SEC and CFTC.”

Related content

WEBINAR

Recorded Webinar: Getting ready for Sustainable Finance Disclosure Regulation (SFDR) and ESG – what action should asset managers be taking now?

Interest in Environmental, Social and Governance (ESG) investment has exploded in recent years, bringing with it regulation and a requirement for buy-side firms to develop ESG strategies and meet disclosure obligations. The sell-side can help here by integrating ESG data with traditional financial information, although the compliance burden remains with asset managers. The EU Sustainable...

BLOG

EDM Council Publishes Cloud Data Management Capabilities Framework

The EDM Council has published a Cloud Data Management Capabilities (CDMC) framework that includes a comprehensive set of data management capabilities, standards and best practices for cloud, multi-cloud and hybrid-cloud implementations. It also incorporates automated key controls to protect sensitive data. The framework is available as a free license to EDM Council members and non-members,...

EVENT

TradingTech Summit London

TradingTech Summit London will explore how trading firms are innovating in today’s cloud and digital based environment to create flexible, scalable trading platforms to support speed to market and business agility. Leveraging the cloud, AI and ML technologies to get an edge, automate processes and simplify operations in a cost effective way is the name of the game and will share practical insight from practitioners and technology leaders who are innovating and driving forward change in trading operations.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...