Regulatory Reporting Recap: Proposed Amendments to Form PF

The regulatory reporting landscape is constantly evolving, making it critical for investment managers to remain abreast of the latest changes and updates. In this blog, IVP experts provide an overview of the recently proposed amendments to Form PF, and how managers can leverage the power of automation to quickly adapt and ensure compliance.

SEC Proposes to Enhance Private Fund Reporting

On August 10^th, the U.S. Securities and Exchange Commission (SEC) announced it had voted to propose amendments to Form PF. These amendments, which the Commodity Futures Trading Commission (CFTC) is considering to propose jointly with the SEC, are designed to enhance the Financial Stability Oversight Council’s (FSOC) ability to assess systemic risk as well as to bolster the SEC’s regulatory oversight of private fund advisers and its investor protection efforts in light of the growth of the private fund industry.[1]

These proposed amendments follow the collapse in cryptocurrency prices earlier this year, which prompted regulators to better understand the risks that the digital asset market could pose to the broader economy. An extension of amendments proposed in January, the newest changes to Form PF now include separate reporting for digital assets, such as cryptocurrency. In addition, these changes aim to:

Enhance Reporting by Large Hedge Fund Advisers on Qualifying Hedge Funds:

The proposal would enhance how large hedge fund advisers report investment exposures, borrowing and counterparty exposure, market factor effects, currency exposure reporting, turnover, country and industry exposure, central clearing counterparty reporting, risk metrics, investment performance by strategy, portfolio correlation, portfolio liquidity, and financing liquidity to provide better insight into the operations and strategies of these funds and their advisers and improve data quality and comparability.

Enhance Reporting on Basic Information About Advisers and the Private Funds They Advise:

The proposal would require additional basic information about advisers and the private funds they advise including identifying information, assets under management, withdrawal and redemption rights, gross asset value and net asset value, inflows and outflows, base currency, borrowings and types of creditors, fair value hierarchy, beneficial ownership, and fund performance to provide greater insight into private funds’ operations and strategies, assist in identifying trends, including those that could create systemic risk, improve data quality and comparability, and reduce reporting errors.

Enhance Reporting Concerning Hedge Funds:

The proposal would require more detailed information about the investment strategies, counterparty exposures, and trading and clearing mechanisms employed by hedge funds, while also removing duplicative questions, to provide greater insight into hedge funds’ operations and strategies, assist in identifying trends, and improve data quality and comparability.¹

The agencies have requested comments on this rule and whether private funds should be directed to report in-depth data about the cryptocurrencies they are holding by October 11^th, 2022.

Once in effect, these changes to Form PF will ensure a greater degree of control over the operations of large private fund advisers and the protection of investors. They will also help maintain balance in the financial ecosystem, especially at a time when the private fund industry is growing at such a rapid pace.

IVP’s Regulatory Reporting solution closely monitors all proposed changes to regulatory requirements to ensure clients remain in constant compliance. This solution is one of the industry’s leading reporting tools designed to seamlessly and efficiently handle cumbersome filing processes and variances in reporting structures. When paired with IVP Managed Services, the solution becomes IVP Regulatory Reporting as a Service, which automates compliance needs with confidence and ensures a smoother filing experience overall.

It is only a matter of time until these proposed Form PF updates come into effect. To learn how IVP Regulatory Reporting Solution can help you adapt to the latest Form PF updates, visit Regulatory Reporting  or contact sales@ivp.in.

Sources/Citations:

https://www.sec.gov/news/press-release/2022-141

[1] SEC Proposes to Enhance Private Fund Reporting, U.S. Securities and Exchange Commission, August 10, 2022.