Summary of CySEC's Circular C404
Memo #47-2020
CySEC Circular No: C404
Date:15/09/2020
Subject: Publication of CySEC’s Review of compliance with the reporting obligation under the Alternative Investment Fund Managers Law (the ‘AIFM Law’) as further specified with the Commission Delegated Regulation (EU) No 231/2013 with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (‘the Regulation’)
Purpose: To inform about the results of a Review performed in relation to the information provided for AIFs managed or AIFs marketed in the EU by AIFMs.
In Summary:
CySEC has issued the Circular C404 on 15/09/2020 in order to inform about the results of a review recently carried out of the quality of information reported to CySEC by AIFMs (‘the Review’). Specifically, this Review looked at information provided for AIFs managed or AIFs marketed in the EU by AIFMs (‘the AIFs’), under Articles 4(3)(d) and 31 of the AIFM Law as further specified under Article 110 of the Regulation (EU) No 231/2013 with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (‘the Regulation’).
The purpose of the Review was to assess the quality, accuracy and whether the reporting of information by AIFMs to CySEC is performed within the timeframe provided in Article 110 of the Regulation.
Following the review, some areas of concern are identified and this circular sets out CySEC’s observations and conclusions.
The publication of common deficiencies identified in CySEC’s Review is designed to assist AIFMs in prioritising their efforts towards reviewing the procedures established, implemented and maintained in relation to AIFMD.
This Circular 404 includes the following sections:
A. Regulatory framework
Reference to the applicable regulatory framework with regards to the Review, ESMA Guidelines and ESMA Q&As.
B. Scope of the Review
The Review assessed the quality of information reported to CySEC by AIFMs for the year ending 31 December 2019 and covered the areas of timely submission, accuracy of information, consistency of information, completeness of information and double reporting.
C. Areas of concern/Observations identified
Under this section are included the areas of concern. The areas of concern should be read in conjunction with CySEC’s Circular C287, published in 2018, which notes in detail the reporting obligations for AIFMs.
D. Immediate next steps
The section refers to the recommended immediate steps for AIFMs.
CySEC needs to effectively monitor and prevent systemic risk and market disruption, therefore CySEC must act on accurate and timely information. Fulfilling AIFMD reporting obligations requires dedicated oversight by all AIFMs to ensure any issues and/or failures are rectified appropriately.
In order to achieve the above and ensure compliance, CySEC advices the AIFMs to nominate a person within their firm who will be responsible for the regular monitoring of AIFMD reporting requirements and dealing promptly with all issues/failures that might arise. In addition, AIFMs are requested to inform CySEC accordingly about the above nomination through the Funds Digital Record.
CySEC also strongly recommends AIFMs to review the ESMA Guidelines and ESMA Q&As. Ensuring that data reported to CySEC is complete, accurate, consistent, timely and not duplicated is of outmost importance in order to foster a smoother-functioning market.
CySEC further notes that AIFMs not complying with their AIFMD reporting obligation will face enforcement action.
Regulation (EU) No 231/2013 with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision can be found on the following link: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0231&from=EN
ESMA Guidelines on reporting obligations under Articles 3(3)(d) and 24(1), (2) and (4) of the AIFMD can be found on the following link: https://www.esma.europa.eu/sites/default/files/library/2015/11/2014-869.pdf
ESMA Questions and Answers on the application of the AIFMD can be found on the following link: https://www.esma.europa.eu/sites/default/files/library/esma34-32-352_qa_aifmd.pdf
CySEC's Circular C287 dated 17/12/2018 about the technical clarifications concerning AIFMD reporting and relevant reporting obligations can be found on the following link: https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=721b147c-c222-4a9f-bdde-b6bdb259f9de
