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Introduction to Form PF Reporting

Form PF came into effect from 31st March 2012 and requires investment advisers registered with the SEC that advise one or more “private funds” to file Form PF with the SEC.

Timings and Frequencies differ, but for “Large Hedge Fund Advisers” it is quarterly reporting within 60 calendar days from the quarter ends. Reporting can be cumbersome. It involves a range of calculations and the data is likely to be sourced from multiple systems, administrators, Portfolio Managers, Portfolio Companies and third parties.

Who Form PF applies to

You must complete and submit a Form PF if:

  • You are registered or are required to register with the SEC as an investment adviser, or you are registered or required to register with the Commodity Futures Trading Commission (CFTC) as a commodity pool operator or commodity trading advisor and you are also registered or required to register with the SEC as an investment adviser; and

  • You manage one or more private funds; and

  • You and your related persons, collectively, had at least $150 million in private fund assets under management as of the last day of your most recently completed fiscal year.

“Private funds” refers to issuers exempt from registration under the Investment Company Act of 1940 Sections 3(c)(1) or Section 3(c)(7). It includes private equity, hedge funds and liquidity funds.

LEGISLATION AND GUIDELINES

FORM PF is required under Sections 404 & 406 of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).

Pursuant to the Act Dodd-Frank,

GUIDELINES

In addition to the legislation, there is range of Guidelines available, including:

There is also comprehensive information on the scheme and on the XML filing requirements.

See below for more details on the filing process.

THE FORM

The form consists of 5 sections, 8 sub-sections and 85 questions.

The information reportable depends on the type and size of the Adviser and the funds, as summarised below:

SECTION INFORMATION REQUIRED TOTAL QUESTIONS APPLICABLE TO REPORT IN RESPECT OF
*Qualifying hedge funds are individual funds with greater than $500m AUM.
SECTION 1A Information about Fund and Related Persons 4 All Private Fund Advisers All Private Funds
SECTION 1B Information about the advising Fund 12 All Private Fund Advisers All Private Funds
SECTION 1C Information about the Hedge Fund you advise 9 All Private Fund Advisers managing 1 or more hedge funds Each Hedge Fund
SECTION 2A Aggregated Information about the Hedge Fund 3 Large hedge fund advisers Each Large Hedge Fund
SECTION 2B Information about Qualifying Hedge Funds 22 Large hedge fund advisers Each Qualifying Hedge funds*
SECTION 3 Information about the Liquid Fund you advise 14 Large liquidity fund advisers Each Large Liquid Fund
SECTION 4 Information about the Private Equity Fund you advise 15 Large Private Equity Fund Advisers Each Large Private Equity Funds
SECTION 5 Request for temporary hardship exemption 6 All Private Fund Advisers – (if applicable) Each Private Funds

For a detailed analysis of the form, click here.

TYPES OF ADVISERS AND FUNDS – MORE DETAIL

For the Large Adviser reporting, the SEC adopts a threshold limit to be considered a threshold of:

  • “large hedge fund adviser” – greater than $1.5 billion in hedge fund assets under management

  • “large liquidity fund adviser” – greater than $1 billion

  • “large private equity fund adviser” – greater than $2 billion in private equity fund assets under management

Further detail is set out in the table below:

FUND ADVISER
Hedge Fund A hedge fund is any private fund, excluding a securitised asset fund that:

  • Pays a performance fee to an adviser taking into account market value
  • May borrow an amount in excess of one-half of its net asset
  • Has gross notional exposure in excess of twice its net asset value
  • Sells securities or other assets short
 Large Hedge Fund Adviser

  • A threshold of $1.5 billion in hedge fund assets under management to be considered a “large hedge fund adviser”
Liquid Fund A liquid fund is a private fund that:

  • seeks to generate income by investing in a portfolio of short term obligations in order to maintain a stable net asset value per unit or minimize principal volatility for investors.
 Large liquid Fund Adviser

  • A threshold of $1 billion to be considered a “large liquidity fund adviser”. With respect to any adviser, liquidity fund assets under management are the portion of such adviser’s regulatory assets under management that are attributable to liquidity funds it advises
Private Equity Fund A private equity fund is any private fund that:

  • is not a hedge fund, liquidity fund, real estate fund, securitized asset fund or venture capital fund; and
  • does not provide investors with redemption rights in the ordinary course.
 Large Private Equity Fund Adviser

  • $2 billion in private equity fund assets under management to be considered a “large private equity fund adviser”,
  • With respect to any adviser, private equity fund assets under management are the portion of such adviser’s regulatory assets under management that are attributable to private equity funds it advises.

REPORTING FREQUENCY AND DEADLINES

The reporting frequency and deadline depend on the type of fund. This is summarised below:

ADVISERS AND FUND TYPE REPORTING FREQUENCY REPORTING DEADLINE
Small Private Fund Advisers above $150 million and other Registered Private Fund Advisers* Annually 120 calendar days from Fiscal quarter closing
Large Hedge Fund Advisers Quarterly 60 calendar days from Fiscal quarter closing
Large Liquid and Money Market Advisers Quarterly 15 calendar days from Fiscal quarter closing

Note:

  • Small Hedge Fund Advisers below $150 million are exempt

  • Large Private Equity Advisers fall under other Registered Private Fund Advisers and report annually.

COMPLETING THE FORM

For a detailed analysis of the Form, click here.

This includes a summary of the different questions, data validation requirements, exposure calculations, and data taxonomies.

General rules on completing the Form can also be found particularly at Instruction 15 of the SEC Paper Version of PF (Form and Instructions).

This includes that:

  • If a question requests information expressed as a percentage, enter the response as a percentage (not a decimal) and round to the nearest one percent;

  • If a question requests a monetary value, provide the information in U.S. dollars as of the data reporting date, rounded to the nearest thousand;

  • If a question requests a numerical value other than a percentage or a dollar value, provide information rounded to the nearest whole number;

  • If a question requests information regarding a “position” or “positions,” you should determine whether a set of legal and contractual rights constitutes a “position” in a manner consistent with your internal recordkeeping and risk management procedures (e.g., some advisers may record as a single position two or more partially offsetting legs of a transaction entered into with the same counterparty under the same master agreement, while others may record these as separate positions);

  • How to distinguish long and short positions;

  • General requirement not to net long and short positions;

  • How to calculate value for derivative – see below on exposure concepts…

EXPOSURE CONCEPTS

Form PF has several different exposure concepts. These are:

  • Regulatory assets under management

  • Net Assets under management

  • Gross Asset Value

  • Net asset value

  • Value

  • Fair Value

  • Gross Notional Exposure

For more detail, click here.

DATA TAXONOMIES

There are a number of data taxonomies relevant for Form PF. These requirements are identifiable from the XSD information.

For more on these click here.

FILING

All Form PFs are filed online through the PFRD (Private Fund Reporting Depository) system.

PFRD is a subsystem of the IARD system. The IARD was built and is operated by the Financial Industry Regulatory Authority (FINRA) although FINRA does not have regulatory authority over Investment Advisers.

Reports can be filed 3 ways:

  • Manually entering information in a web-based form;

  • XML batch filings; and

  • Machine-to-machine XML filings

Click here for further detail on filing Form PF.

COMPARISON TO AIFMD ANNEX IV

There are high-level similarities between Form PF and AIFMD Annex IV, including in the broad range of data required.

However, Annex IV is in practice much more complicated featuring c. 349 fields compared to 85 for Form PF. The calculations are also more complex, including in respect of derivatives calculations.

Also, with Form PF one consolidated form is completed to cover all funds (though with some sections requiring completion by each fund) whereas AIFMD Annex IV Reporting requires a report to be submitted per fund.

Also, Investment Advisers other than “Large hedge fund Managers” and “Large Liquid Fund Managers” only have to report annually and many only have to report the Section 1a and 1b information.

Click here for a summary comparison between AIFMD Annex IV and Form PF.

FUNDS-AXIS MANAGED SERVICE

Funds-Axis provide a full managed service consultancy in respect of all regulatory reporting, including Form PF.

Our consultants have extensive knowledge of the Form PF regulation and of filing to the different regulators.

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