A significant proportion of GPs operating, or considering operating, a fund subject to the Alternative Investment Fund Managers Directive (AIFMD) have unfinished compliance work ahead of the directive’s Tuesday deadline.
According to a BNY survey of some 60 managers across Europe, Asia and the US, about one-third still need to either implement risk and control systems, update their fund documents for reporting purposes or appoint a depository to safekeep partnership assets.
“It has been clear since we began our surveys last summer that the industry has consistently been playing catch up as firms have sought to hit tomorrow’s deadline,” said in a statement Hani Kablawi, BNY Mellon’s head of asset servicing in MENA.
When it comes to new compliance expenses in a post-AIFMD era, seventy four percent of respondents said regulatory reporting, followed by risk and compliance reporting (58 percent) will be the greatest one-off costs. GPs also said these two areas will represent the biggest ongoing costs after authorization, according to the survey.
Investors meanwhile will be saved from most of these new expenses, the survey found. Only 13 percent of respondents plan to pass on the full expense of AIFMD to the fund while 29 percent of GPs plan to pass on a portion of the costs. However, these figures represent an uptick from previous BNY Mellon surveys, implying that GPs are dealing with higher-than-expected levels of AIFMD-related compliance costs.