Key Takeaways
- • MFA urged the FCA in two comment letters to streamline fund reporting and adopt more proportionate rules for alternative investment fund managers (AIFMs), responding to consultations on the proposed FRAME regime and reforms to the UK AIFM regime.
- • MFA's FRAME recommendations include aligning reporting with other major jurisdictions, raising the Enhanced Reporting threshold, raising the drawdown reporting trigger to 20%, extending the deadline to three business days, and excluding non-UK managers from scope.
- • MFA's AIFM letter argues that AUM-based capital requirements do not reflect the risks of managers who invest on behalf of clients rather than trading on their own balance sheets.
- • MFA says proportionate rules aligned with other jurisdictions would reduce compliance costs and strengthen the UK's position as a global asset management centre.
Summary
The Managed Funds Association (MFA) submitted two comment letters to the Financial Conduct Authority (FCA) urging it to streamline reporting and adopt more proportionate regulation for alternative investment fund managers (AIFMs). The letters respond to separate FCA consultations on the proposed Fund Reporting for Asset Management Entities (FRAME) regime and on reforms to the UK's AIFM regime, according to the publisher's account of the submissions.
Jillien Flores, MFA Chief Advocacy Officer, said that "unnecessary and disproportionate regulatory burdens put the UK at a disadvantage in the competition for global capital." Flores added that the FCA is right to pursue a simpler, more proportionate fund regime, but that its proposals need to go further. MFA welcomed the FCA's efforts to simplify fund reporting through FRAME but urged closer alignment with other major jurisdictions. It noted that many UK managers already report to the U.S. Securities and Exchange Commission (SEC) through Form PF, and that greater alignment would reduce compliance costs while giving regulators more consistent data.
MFA's FRAME recommendations include allowing managers to use existing calculation methodologies, including those used in other jurisdictions; raising the Enhanced Reporting threshold so smaller managers are not subject to unnecessarily detailed requirements; and making event-based reporting more proportionate by raising the drawdown reporting trigger to 20%, extending the deadline to three business days, and excluding non-UK managers from scope. MFA also called for better fund classifications, including defining hedge funds by actual leverage rather than hypothetical exposures, and clarifying reporting requirements for private credit and loan origination funds.
In its separate AIFM letter, MFA argued that capital requirements based on assets under management do not reflect the risks posed by managers that invest on behalf of clients rather than trading on their own balance sheets. The letter also calls for simpler disclosure requirements for professional investors and greater flexibility for firms to broaden the regulated activities they undertake in the UK. MFA said these reforms would reduce unnecessary costs, help UK managers grow, and make it easier for global firms to serve UK investors.
Jillien Flores, MFA Chief Advocacy Officer, said that "unnecessary and disproportionate regulatory burdens put the UK at a disadvantage in the competition for global capital." Flores added that the FCA is right to pursue a simpler, more proportionate fund regime, but that its proposals need to go further. MFA welcomed the FCA's efforts to simplify fund reporting through FRAME but urged closer alignment with other major jurisdictions. It noted that many UK managers already report to the U.S. Securities and Exchange Commission (SEC) through Form PF, and that greater alignment would reduce compliance costs while giving regulators more consistent data.
MFA's FRAME recommendations include allowing managers to use existing calculation methodologies, including those used in other jurisdictions; raising the Enhanced Reporting threshold so smaller managers are not subject to unnecessarily detailed requirements; and making event-based reporting more proportionate by raising the drawdown reporting trigger to 20%, extending the deadline to three business days, and excluding non-UK managers from scope. MFA also called for better fund classifications, including defining hedge funds by actual leverage rather than hypothetical exposures, and clarifying reporting requirements for private credit and loan origination funds.
In its separate AIFM letter, MFA argued that capital requirements based on assets under management do not reflect the risks posed by managers that invest on behalf of clients rather than trading on their own balance sheets. The letter also calls for simpler disclosure requirements for professional investors and greater flexibility for firms to broaden the regulated activities they undertake in the UK. MFA said these reforms would reduce unnecessary costs, help UK managers grow, and make it easier for global firms to serve UK investors.
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