KNF issued a communication on the fulfilment of information and reporting obligations by ASI managers

The Financial Supervision Commission informs that the scope of the information obligations regarding ASI managers depends on whether the ASI manager, according to Article 70t Act dated 27 May 2004 on investment funds and the management of alternative investment funds – Journal of Laws of 2018, item 1355, as amended (Further: ,,,The Act’), pursues an activity consisting of the management of an alternative investment company, including the marketing of that company on the basis of a Commission authorisation, or according to Article 70zb Act, based on entry in the ASI management register.

As per content Article 70zb(4) Act, to the ASI Manager, who carries out specific activities under Article 70e(1) Act without Commission authorisation, after being entered in the management register of ASI, the provisions shall not apply. Article 70d, Article 70f(3-12), Article 70g-70j, Article 70l-70r and the provisions of Sections IIIb, IV, XII and XIII of the Act.

Therefore, the management of ASI operating on the basis of an entry in the ASI management register is obliged to fulfil the following information and reporting obligations.

1. Information obligations for ASI managers included in the ASI management register

According to Article 70zd(3) The Act, externally managing the ASI entered in the ASI management register, reports to that register any alternative investment company that it intends to manage by providing the Commission with information about its company (name) together with a description of its investment policy and investment strategy or a statement that this policy and strategy are in line with the description in question under Article 70zc(2)(4) point (b) The bill.

However, according to Article 70zd(4) The Act managing the ASI entered in the ASI management register shall immediately inform the Commission of:

1. changing the data specified under Article 70zd(1) Act, i.e. the change of the company (name) and address of the managing seat of the ASI and, in the case of external ASI manager, the change of the company (name) and the address of the seat of each alternative investment company managed by it,
2. the cessation of the management of an alternative investment company included in that register,
3. where the cessation of management entered in the ASI register is related to the acquisition of the management of that alternative investment company by another entity, the name and address of that entity.

At the same time, the Commission’s Authority would like to draw attention to the content Article 229a(2) The Act, which clearly states that where an ASI manager operating on the basis of an entry in the management register of an ASI infringes the provisions or obtains an entry in the management register of an ASI on the basis of false statements or documents proving the incorrectness, The Commission may, by decision:

• 1) remove the ASI manager from the ASI management register or
• 2) impose a fine of up to 5,000,000 PLN, either
• 3) apply the penalties in question together Under points 1 and 2.

Consequently, the Commission’s Authority points out that, in the light of the current legal standards, the content Article 229a(2) Therefore, the Act should be considered that the entity, after being entered in the management register of ASI, may modify the documents submitted as annexes to the application for entry in the management register of ASI, which have previously been verified by the Commission in the course of the administrative procedure, without having to inform whether or not to obtain approval from the Commission as to the content of the amendments. However, the Commission’s Authority notes that these changes can only be made within the limits of the law and that the activities carried out by that entity should be carried out in accordance with fair trade rules, in a manner that adequately safeguards the interests of ASI investors, and that the changes introduced will be justified by the investment activity of ASI, and there will be no reason to believe that the entry in the management register of ASI was obtained on the basis of false statements or documents proving the error.

At the same time, it should be stressed that the information obligations referred to above should be carried out in writing, in accordance with previous correspondence with the Office under the provisions of the administrative procedure. There is therefore no obligation to use any forms in this respect.

II. Reporting obligations of ASI managers included in the ASI management register

Legal basis and scope of information to be provided under reporting obligations.

The ASI manager entered in the ASI management register shall carry out reporting obligations based on:

• 1) Article 222c(222e) Acts in conjunction with Article 70zb(4) Act including Article 110(1), Article 5(3) and Annex IV Regulations 231/20131,
• 2) Regulation of the Minister for Development and Finance dated 21 December 2016 on the completion of information obligations for alternative investment fund managers (Journal of Laws of 2016, item 2097),

1. Regulation of the Minister for Development and Finance dated 27 December 2016 on measures and technical conditions for the transmission of certain information by entities supervised by the Financial Supervision Commission (Journal of Laws of 2016, item 2288).

According to Article 222c(1) The ASI Management Acts shall draw up and transmit to the Commission, taking into account Article 110 Regulation (EU) 231/2013, Periodic reports on:

• 1) investment activities carried out on behalf of managed alternative investment companies,
• 2) liquidity and risk management of managed alternative investment companies for each alternative investment company,
• 3) the use of AIF leverage in managed alternative investment companies that use AIF leverage for each alternative investment company.

Implementation of the reporting obligations set out above should take into account Article 110 Regulation (EU) 231/2013. According to the content Article 110 mouth. 1Regulations Regulation (EU) 231/2013, AIFM[2] take into account the following information in the reports transmitted to the competent authorities:

• 1) information on the main instruments to be traded, including a list of financial instruments and other assets, including AIF investment strategies and the degree of geographical and sectoral concentration of its investments,
• 2) information on the markets of which it is a participant or on which it conducts active transactions,
• 3) information on the diversification of the AIF portfolio, taking into account but not limited to key exposures and concentrations.

At the same time, according to Article 222e(1) Alternative investment fund managers' laws shall be obliged to provide the Commission with information in addition to the information to be included in the reporting forms submitted. In Annex IV to Regulation (EU)) 231/2013, necessary to monitor systemic risk.

1 Commission Delegated Regulation (EU) No Regulation (EU) 231/2013 dated 19 December 2012 supplementing the Directive of the European Parliament and of the Council Directive 2011/61 as regards exemptions, general operating conditions, depositaries, leverage, transparency and supervision (Official Journal of the European Union L, No. 83 to 22 March 2013 p. 1), hereinafter: ,Regulation (EU) 231/2013”.

2 AIFM – managing an alternative investment fund, i.e.: also managing ASI.

Additional information is specified in the legislation issued on the basis of Article 222e(3) Act, i.e.: in the Regulation on supplementary information obligations for alternative investment fund managers, as set out above. Content section 3 section 1 in conjunction with section 9 that Regulation, the management of ASI operating on the basis of an alert to ASI management records, shall provide the Commission with information, including on alternative investment companies managed by it, including:

1. the number and value of transactions concluded by individual alternative investment firms using high frequency algorithmic trading techniques,
2. the geographical structure of the investments by issuer, expressed as a percentage of the value of the assets included in the investment portfolios of the individual alternative investment companies determined taking into account the Article 2 and Article 10 Regulation (EU) 231/2013,
3. a percentage of the value reflecting the extent to which short positions held by an alternative investment company serve to reduce investment risk, as regards 5 the main categories of investments constituting investments in alternative investment companies;
4. Total value of assets placed on 5 the main markets where alternative investment companies invest;
5. Total value of assets invested in 5 the main categories of investments, which are theinvestments of alternative investment companies,
6. exchange rate used to convert the total value of alternative investment companies into euro,
7. the exchange rate of the basis currencies of individual alternative investment firms compared to the euro,
8. the net asset value of individual alternative investment companies,
9. the value of assets placed by individual alternative investment companies on 3 the main markets where they invest,
10. the identification of the managers of alternative investment companies, alternative investment companies, markets, instruments, counterparties and undertakings using the national identifier of the AIFM, the national identifier of the AIF and codes such as the MIC, BIC, LEI, ISIN, AII, CUSIP, SEDOL, Bloomberg, Reuters, ECB, and the ilods have been given.

Form and manner of carrying out reporting obligations

Information in question under Article 222c(1) Acts, taking into account Article 110 Regulations, ASI managers shall provide a formalised format in accordance with the reporting form included In Annex IV to Regulation (EU)) 231/2013.

Additional information referred to under Article 222e(1) The Act, as set out in the provisions of the regulation on the addition of information obligations to alternative investment fund managers, shall be transmitted by the ASI manager to the Commission in accordance with the provisions of the Regulation. section 4 that regulation.

Content section 4 the ASI's appointed regulation shall provide the reporting data specified in the reporting forms presented In Annex IV to Regulation (EU)) 231/2013 and the information in question Under section 3 Regulation on the completion of information obligations for managers of alternative investment funds, in electronic form, in a file in accordance with the requirements laid down In the Annex to this regulation.

At the same time, the method and mode of carrying out the reporting obligations referred to above, as set out in Articles 222c(4) and 222e(2) Act, was defined in regulations issued on the basis of Article 55(1) Act on supervision of the capital market, i.e.: in the provisions of the Regulation on technical measures and conditions for the transmission of certain information by entities supervised by the Financial Supervision Commission. It follows from the above that the interim reports of ASI managers (hereinafter also ‘the AIFM’s interim reports’) are transmitted via the Electronic Information Transmission System (ESPI).

The UKNF shall provide information on the key aspects of practical nature arising from the above-mentioned regulations, to be taken into account in the preparation and transmission of periodic reports by ASI Managers:

•

The relevant information on the functioning of the ESPI can be consulted on the KNF website at:https://www.knf.gov.pl/dla_rynku/espi In particular, references to documents such as ESPI Terms of Use, or a template for the request for access to ESPI, can be found here.

•

In order to gain access to ESPI, it is necessary to submit a prior application for access to ESPI, using the template available on KNF websites. The application form for access to the ESPI system shall also be transmitted by the UKNF, together with a letter informing about the entry in the ASI management register.

•

It is an absolute obligation to draw up periodic reports of AIFMs in the form of XML files compatible with the required XSD schemes. Links to files containing the required XSD diagrams for XML files are presented in the relevant section referred to above. https://www.knf.gov.pl/dla_rynku/espi

The ASI Manager is required to provide technical and organisational solutions to enable the development of proper, i.e. in particular compatible with XSD diagram, XML file. In addition, it is strongly recommended to validate the compatibility of the XML file with the required XSD scheme using parser software before sending the file to KNF.

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Reporting obligation includes transfer one an XML file containing data on ASI Manager (DATMAN) and separately XML files containing information on each alternative investment company managed (DATAIF). This also applies internally to ASI managers who are required to provide the DATMAN file containing self-information as a manager and the DATAIF file containing self-information as an alternative investment company.

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The transfer to KNF of XML files containing reporting data is done by loading these files (whose files have been given the appropriate name, whose structure has been defined) Under section 3 the Annex to the Regulation supplementing the information obligations of alternative investment fund managers) in the form of annexes to the ESPI report drawn up on the form ‘ZAFI 222c’ (available on the ESPI publication page at: https://espi.knf.gov.pl/emitent/ in the ‘ZAFI’ tab, and then transmit such a ESPI report supplemented by annexes to the ‘ZAFI’ firm of the ESPI system.

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The transferred files shall be validated in the IT system used by the UKNF to accept the AIFM's periodic reports. The validation results are available in the so-called feedback channel available at the websitehttps://espi.kng.gov.pl/walidacja For technological reasons, validation results appear with some delay compared to the time of submission of the report. It is necessary to monitor the validation results and, where the system generates error messages, to provide appropriate corrections.

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The validation of transferred XML files is, in principle, multi-stage and includes in particular:

•

Technical validation (XSD compatibility, file name accuracy, etc.) — possible errors identified as a result of this validation are marked with a code starting with ‘ZAFI-..’ and in the event of such an error, the correction number in the next file shall not be increased (i.e. in the case of correction of the originally transmitted file, the correction number will continue to be ‘000”);

•

Substantial validations (substantial correctness of the data transmitted as content of the XML file, to the extent that such verification is possible using automatic validation rules) — possible errors identified as a result of this validation are identified with a code starting with the ‘CAF-...’ or ‘CAM-...’ characters, and if such an error occurs, the correction number shall be increased when the correction is transmitted.

In the next file(i.e. in case of correction of the originally transmitted file which had the correction number ‘000”, the correction of this file should be marked with the correction number ‘001”).

Reporting periods and deadlines for carrying out reporting obligations

Having regard to Article 5(5) of Regulation (EU) 231/2013 and the provisions set out in Annex I, point 3, of the ESMA document Guidelines on reporting obligations under Article 3(3)(d) and provision numbered 24, sections 1, 2 and 4, of the AIFM Directive (ESMA/2014/869), an ASI manager operating on the basis of an entry in the ASI managers register is subject to annual reporting of its periodic AIFM reports.

According to section 5 point 2 Annex to the Regulation supplementing the information obligations of alternative investment fund managers for the reporting of reporting data over and over.

first by the ASI manager, the reporting data cover the period from the first day of the quarter following that when the information to be transmitted becomes available.

In addition, according to section 5 point 1 the Annex to that Regulation, the reporting data shall reflect the state at the last working day of the quarter, half-year or calendar year in accordance with the calendar of the Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET).

In the light of the above, it must be concluded that first the periodic report referred to under Article 222c(1) The Act containing data on the ASI manager should be transmitted by the ASI manager operating on the basis of an entry in the ASI management register for the period from first the calendar quarter following the date of entry of the ASI manager in the ASI management register until the last day of the year concerned.

Therefore, if an entry in the management register of ASI was made on 15 February 2018, first The interim report should cover the period from the date 1 April 2018 up to day 31 December 2018 On the other hand, the subsequent interim report should cover the period from 1 January 2019 up to day 31 December 2019, provided that the conditions laid down are maintained under Article 70zb Act governing the possibility of operating on the basis of an entry in the ASI management register.

At the same time, ASI managers entered in the ASI management register in the fourth quarter 2018, transmit for once first the periodic report of the AIFM as a general rule only for the period from the date 1 January 2019 up to day 31 December 2019

The same rule applies to the periodic reports in question under Article 222c(1) Act containing information on individual alternative investment companies managed by the ASI manager.

On the other hand, the maximum time limit for transmission to the Commission of the abovementioned periodic reports pursuant to the provision Article 110(1) in fine Regulation (EU) 231/2013 period one one month after the end of the reporting period, where the alternative investment fund to which the report relates is a fund of funds, that period may be extended by 15 days. Therefore, the interim report of the ASI manager operating on the basis of an entry in the ASI management register for the financial year in question should be transmitted by the date of the 31 January the following year.

Other relevant elements of the regulatory environment for the fulfilment of reporting obligations of ASI managers

In view of the practical aspects of the performance of the reporting obligations of ASI managers, it is justified to take into account the content of the following documents, as appropriate, to the extent that they apply to ASI managers operating on the basis of an entry in the ASI management register:

1. ESMA guidance on reporting obligations based on Article 3(3lit). (d) and Article 24(1)(2)(4) AIFM Directive (ESMA/2014/869),
2. published and updated by the European Securities and Markets Authority (hereinafter: ‘ESMA’) a document Questions and Answers. Application of the AIFMD[3] (ESMA34-32-352) (answers to Question No 64 and 66 relating to the transfer procedure first an interim report),
3. the technical guidance document published by ESMA and the consolidated reporting scheme (ESMA/2013/1358 and 1359),
4. XSD diagrams for XML files to be used for reporting specified reporting data In Annex IV to Regulation (EU)) 231/2013 version 1.2 (document ESMA/2013/1361).