No such thing as a free app? Probably not, but MIK Fund Solutions comes close with the offer of free-of-charge software for Form PF filing. The catch is simple, if users like the software, MIK hopes they will be interested in licensing its data management platform.
According to Marshall Safer, co-founder and chief operating officer of the hedge fund decision support software provider, “Firms continue to wrestle with all the requirements associated with Form PF filing. The filing itself is the easy part and that is why we are providing the software for that aspect to any firm gratis, whether they consider our data solutions or not. The difficult issues are the structure and architecture of data, the cost of that data and the uses of data beyond Form PF.”
The Form PF rule results from the 2010 Dodd-Frank Act and applies to advisers to hedge funds, private equity funds and liquidity funds, which must submit information on the operations and strategies of the private funds they manage. The deadline for advisors to register with the Securities and Exchange Commission was March 31, 2012, ahead of the Form PF rule taking effect on June 15 for advisers with more than $5 billion of assets under management. In July, liquidity funds with more than $5 billion of assets under management had to make their first Form PF filing, while this was followed in August with first Form PF filing for hedge funds of a similar size.
The next major deadline is December 15, when the rule will become effective for all other filers with assets under management over $150 million. While some firms must file reports on an annual basis and can probably get away with manual filling and filing, MIK is convinced that those that must report on a quarterly basis need an automated solution.
MIK says the phone has been ringing frequently since it made its offer of free Form PF software in August. To date, about a dozen hedge funds are using the free software, which must be installed locally on an SQL server, and over the past couple of months, when the software was first offered on a free trial basis, four firms have converted from Excel spreadsheet reporting and implemented the MIK data management platform. Safer says information needed to fill Form PF should be easy to access using a data management platform, but that this is not always the case if Excel of accounting systems are used to source the information.
Essentially, the MIK software provides a user interface for the creation and filling of Form PF; collaboration and workflow for multi-user environments; an audit trail; document management and storage for answers to Form PF questions; and a secure e-filing capability.
MIK has 45 hedge fund customers using its data management platform. They have received the Form PF software free of change and can automatically calculate required data, populate the form and file it.
Users of the software only must first make the calculations and then fill and file the form. The company believes it is the only vendor providing free Form PF software, but notes a free online tool on the FINRA website. But this, says Safer, is not satisfactory as it does not include an audit trail and storage facility that could provide back-up for regulatory and compliance purposes.
With six years in the market, 45 customers and 50 employees, MIK’s approach to marketing may not be typical, but it could prove to be profitable. As Safer concludes: “There is no reason not to give the Form PF software away. It’s already developed, it’s a commodity and we won’t commercialise it. The bigger concern is data management and that is the conversation we want to have.”