In July 2016, Fried Frank published a Client Memorandum detailing proposals by the UK Financial Conduct Authority (“FCA”) to extend the scope of regulatory reporting (“Annex IV reporting”) by alternative investment fund managers (“Managers”) to include certain funds that are not marketed into the EEA.

To recap, under those proposals:

  • certain non-EEA Managers that market feeder funds under the UK’s National Private Placement Regime (“NPPR”) will be required to make Annex IV reports to the FCA, not only with respect to the feeder fund being marketed, but also with respect to the master fund, irrespective of whether the master fund has itself been marketed in the UK; and
  • certain UK Managers that manage non-EEA funds, but do not market them or their respective feeders in the EEA, will nevertheless be required to submit Annex IV reports in respect of those funds, whereas they currently have to report only very limited information.

The FCA has now signalled its intention to move forward with the majority of its proposals.

Our previous client alert contained more detailed commentary around the implications of these developments. However, as summarised below, there are several points worthy of note where the FCA have departed slightly from their original proposals.

With respect to the first change outlined above, the FCA had previously intended to extend Annex IV reporting to non-EEA master funds whose feeder was marketed in the EEA, not only where the master and feeder funds shared the same Manager, but also in circumstances where they had different Managers within the same group. This proposal has now been dropped – the extended rule will only apply where the master and feeder funds share the same Manager. Further, the FCA has applied this rule only to funds whose assets under management are such that they are subject to quarterly reporting requirements.

With respect to the second change outlined above, the current position is that a UK Manager is only required to conduct Annex IV reporting in respect of non-EEA funds that are not marketed in the EEA if the relevant fund is a master fund and the corresponding feeder fund (managed by the same Manager) is an EEA fund, or if not, is marketed in the EEA. The FCA has narrowed this requirement so that is applies only to UK Managers whose aggregate assets under management are such that the Manager is subject to quarterly reporting requirements. 

The FCA has, in parallel, created an additional requirement on UK Managers to report on non-EEA funds that are not marketed in the EU, even if they are not master/feeder arrangements as referred to above, where the relevant fund is subject to quarterly reporting by reference to its own, fund-specific assets under management.

These reforms will become effective from 29 June 2017. They will require Managers within scope to report to the FCA under the new rules by the next reporting date of 31 July 2017, or 15 August 2017 in the case of fund of funds managers. Although it might seem odd for the rules to come into force with almost immediate effect, the FCA has indicated that it sees the period between now and the effective date as a transitional period during which firms can take the steps necessary for compliance.