07.01.2013
By Terry Flanagan

Form PF Spells Big Headaches for Hedge Funds

The Securities and Exchange Commission’s Form PF presents a monumental data management challenge for hedge funds and fund administrators.

Form PF, a creation of the Dodd-Frank Act, requires registered investment advisers (RIAs) for private funds such as hedge funds and private equity funds that meet certain thresholds to disclose details about the types of securities they trade, their use of leverage and other risk exposure measures.

Citi’s Form PF platform provides extensive data management tools to gather, aggregate and map data in order to deliver the information needed to prepare and finalize the reports for filing with the SEC.

“Since Form PF’s implementation, our clients have worked hard to meet filing requirements in a short amount of time,” said Mike Sleightholme, global head of hedge fund services at Citi. “With this solution, as well as a dedicated team from Citi, our clients have been able to streamline the filing process and focus their energy on managing their increasingly complex organizations.”

Mike Sleightholme, Citi

Mike Sleightholme, Citi

Form PF filers need to create consolidated, useable data from their accounting and transaction systems, which can mean data aggregation, collation, mapping, and centralization.

“The data gathering process should start where the majority of the firm’s data is held and flow to other systems and companies from that central point,” said Jeff Rhodenizer, account manager at Admiral Administration, which administers over 200 funds totaling approximately $19 billion in net assets. “Data housers are thus a logical starting point to feed a Form PF solution.”

Admiral Administration has just completed its first wave of Form PF filings in collaboration with its clients. Through its partnership with Data Agent, Admiral was able to integrate data housed in its portfolio account system (Advent Geneva) and its transfer agency system (Admiral Avatar) with Data Agent’s data warehouse system, providing its clients with a web-based collaborative solution to file the adviser’s Form PF directly to FINRA through the Private Fund Reporting Depository (PFRD).

BNY Mellon is offering two Form PF services: a premium service tailored to individual client needs where BNY Mellon collects and aggregates data from internal and external sources, and a standard service where BNY Mellon receives calculated data from the client. With either option, clients review and then file the completed Form PF with the SEC.

“Fund managers and advisers are challenged by growing regulatory demands. This important new service is part of our ongoing investment in technology to make reporting and compliance as seamless for clients as possible,” said Alan Flanagan, global head of product management for alternative investment services at BNY Mellon. “Investment clients that need the infrastructure or added resources to identify, aggregate and manage Form PF requirements can turn to us for flexible, cost-efficient support, allowing them to better focus on their core expertise of investment management.”

RIAs are required to file Form PF with the SEC either quarterly or annually, based on the size and type of private funds under management. Investor and fund information required includes portfolio holding data, counterparty exposure, plus beneficial owner and collateral management details.

In an environment of expanding regulatory oversight, demand for greater transparency, increasing competition and operational complexity, having access to key portfolio data and exposures across multiple counterparties, fund structures and geographies is critical.

Citi has launched OpenAi, which connects clients’ trading platforms seamlessly to Citi’s processing systems, third-party providers, prime brokers and market data sources, and gives them direct access to operational workflow throughout the service lifecycle.

OpenAi provides alternatives managers with process and data visibility along with visualization tools to view and customize data online in real time, and access through mobile devices.

“Operating an alternative asset management business today requires substantially more resources to compete than previously,” said Sleightholme. “Institutional investors today are demanding more transparency and visibility, and through Citi OpenAi our clients have access to key aspects of operating an alternatives business in one web-based platform.”

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