- Only 19% of respondents submitted requests for authorisation during 2013, leaving 81% of AIFMs surveyed still to apply to their regulator. The survey also found that 41% of respondents said they plan to submit their application in Q1 2014 while a further 20% said they would do so during the final three months period prior to the July 22 deadline – irrespective of the time required for preparing and processing applications.
- Five per cent of AIFs surveyed are expected to be closed, merged or sold, potentially resulting in less choice for investors.
- The mean cost of AIFMD compliance is expected to be $300,000, consistent with the $305,000 figure posited by respondents to BNY Mellon's previous survey six months ago. The majority of respondents believe the project/one-off costs of fulfilling AIFMD risk and compliance requirements will be at least $100,000 – and potentially over $250,000 – per institution.
- Nearly half (46%) of respondents believe additional technology will constitute the greatest increase in on-going costs in order to comply with risk and compliance requirements.
- 26% of those polled said they will pass on some of the increased costs to fulfil regulatory requirements onto the fund (impacting TER), while nearly half (46%) are still assessing how to absorb the additional cost. In the last survey, 88% of participants believed the costs of funds would increase as a result of AIFMD, which suggests the industry is questioning the need or ability to pass costs on.
- Nearly 60% of respondents have either appointed, or are in the process of appointing, an AIFMD compliant depositary service, as required under the authorisation application process. Conversely, 17% expressed an intention to use a 'depositary lite' service, giving flexibility to distribute non-EU domiciled funds within the EU.
- The burden of additional requirements for regulatory reporting will be undertaken by in-house teams for nearly two thirds of respondents, supported by administration providers (23%), depositary service providers (26%), while 37% are still assessing their needs. Twenty five per cent of respondents reported that hiring experienced staff is 'very challenging'.
- In general, progress on implementing new AIFMD risk and compliance capabilities appears to be further advanced than other aspects of work:
- Fifty-five per cent of respondents have implemented, or are close to final implementation of, a risk management framework; and 68% have completed, or are near completion of, their compliance framework.
- The majority of respondents (70%) are building in-house systems to develop their risk and compliance monitoring processes, with 47% planning to use data from their portfolio managers.
- Various approaches are being taken by managers around risk and compliance, with some respondents adopting multiple approaches simultaneously. Sixty per cent said they are planning a monthly suite of comprehensive reports for monitoring risk and compliance. Fifty per cent are looking to use daily reporting, and thirty three per cent are planning to use online dashboards summarising risk and compliance reports.
- Almost 4 in 10 (39%) have outsourced, or are considering outsourcing, their risk and compliance reporting requirements.
- Ninety-three per cent consider the increasing costs to support risk and compliance data and reporting as being challenging.
Over 80% Of Fund Managers Have Yet To Seek AIFMD Authorisation As July Compliance Deadline Looms, According To New BNY Mellon Survey
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