Institutional investors reporting for investment funds
CRR/CRR II, Basel IV, GroMiKV, VAG, Solvency II, IORP II
Credit institutions, insurance undertakings and pension schemes require comprehensive transparency data on the investment portfolios they invest in to fulfill their regulatory requirements. As a result, they request a vast range of reports from asset managers in a standardized format and in a timely manner. We refer to such reports as “Institutional Investors Reporting” (IIR).
The IIR reporting list is extensive, with different names and acronyms used depending on the investor, country, or regulator, such as:
For credit institution investors: the Solvability ratios (Solva or SolvV), Large exposure (GroMiKV), CRR (ECD and CVA), KVG, LCR, BPER, French reporting (CA, GCE, BP, CRDV, CL), Basel III and CRD V reporting are commonly requested.
For insurance undertaking investors: the VAG, Solvency II TPT, including or excluding SCR Market, SCR Market Factsheet, QRT, QAD, SST, ILS, ILP and RBC reporting are commonly requested.
For pension scheme investors: the EIOPA and ECB, FTK, PKG, QMV, DRA, VeV, COVIP and AFP reporting are commonly requested.
On the one hand, the ability to provide this information is a factor that institutional investors increasingly consider prior to investment; and on the other, the inability to provide these reports for existing investors can trigger redemptions to maintain compliance with regulatory limits or mitigate regulatory cost in capital.
Your institutional investors reporting challenges
These institutional investors are subject to one or multiple regulations, which require dedicated reports to monitor their compliance and the risks they are exposed to through portfolios managed by third parties.
Credit Institutions as investors:
Within Europe, the European Parliament and the Council, leveraging Basel III and IV guidelines, implemented the Capital Requirement Regulation (EU) No 575/2013 as amended by Regulation (EU) No 2019/876 and Directive 2013/36/EU as amended by Directive (EU) 2019/878, the so-called CRR II and CRD V. As a result, European credit institutions (ECI) and investment firms (IF) are required to calculate their capital requirements considering the risk profile of their balance sheet exposures. This includes the look-through on their investment fund holdings to estimate their exposure in terms of credit risk (solvability ratios), the currency risk (FX exposure), the countercyclical buffer (country exposure), the concentration risk with large exposure and the liquidity risk (Liquidity Coverage Ratio).
Worldwide, the Basel III and IV guidelines are implemented in several countries (e.g., Saudi, Japan and the United Arab Emirates), with regulators requiring reporting that includes the look-through on investment funds.
Insurance undertakings as investors:
Within Europe, the Solvency II (SII) Directive (2009/138/EC) has also aligned solvency capital requirements (SCR) for insurance companies with the risk profile of their assets and liabilities, with a look-through requirement on their investment fund holdings. To reduce cost in capital, insurance undertakings are collecting as much portfolio holding information as possible via the Tripartite Template (TPT) to estimate the risk they support through those investments. Quality, time and completion rate, including multiple levels of look-through, are standard reporting requirements to keep these investors in the asset managers’ funds.
In addition, some European regulators, such as the German BaFin with the VAG report in Germany, also require compliance reporting on investment fund exposures held by insurance undertakings, and have established dedicated reporting templates in coordination with local investment fund associations.
Worldwide, many countries, inspired by European regulations, have implemented equivalent regulation. Even if the look-through requirement on investment funds is not generalized, some countries such as Singapore are collecting equivalent reporting, and others are following closely (e.g., Hong Kong).
Pension schemes as investors:
Within Europe, pension funds' regulatory requirements are still established by each national regulator, with a notable increase in transparency requirements for investment funds since 2011: Austria (QMV or PKG reporting), Italy (COVIP reporting), Germany (VAG reporting), Netherlands (FTK reporting), and Sweden (Traffic Light).
At the European level, with the application of the IORP II regulation, the ECB and EIOPA request a minimum level of transparency from pension schemes, presently mainly for statistical purposes. Most local regulators have updated their reporting formats to take these additional disclosure needs into consideration (e.g., FTK, COVIP and QMV).
Worldwide, some countries have implemented regulations to monitor pension scheme risk exposure, such as Chile (AFP reporting) and Singapore (ILS reporting). Other APAC countries are following this trend, encouraging pension schemes to collect the necessary information to monitor their risk hold via their third-party portfolio managers.
How we can help
Asset managers must take these requirements and their evolution into consideration when developing or marketing new products and be ready to deliver a comprehensive set of data in country-specific reporting templates.
Leveraging an expertise built since 2007, Deloitte Luxembourg is the Deloitte center of excellence for IIR services and can assist you in meeting your look-through requirements. We offer to outsource the production of IIR, whatever the reporting format requested. We cover the end-to-end reporting process:
We assist in reducing your time to market and enhancing your client satisfaction. Next to industry-standard templates, Deloitte can also provide you with tailor-made templates, designed to satisfy any specific needs of your clients.
Who needs institutional investors reporting?
- To enable their investors to reduce capital requirements and fulfill regulatory disclosure requirements
- To facilitate institutional due diligence and reduce time to invest
- To enhance portfolio optimization according to Basel III or Solvency II
- To provide added value client reporting and client services
Custodians and fund administrators
- To gain a key competitive advantage by demonstrating capabilities in complex reporting (e.g., Solva KSA, GroMiKV, CRR, ECD and CVA, Solvency II, VAG or PKG, etc.)
- To provide added-value services
Institutional investors reporting services
We collaborate with more than 80 global fund promoters and administrators, representing over 32,000 reports annually for more than 2,000 funds and 5,000 share classes, covering all IIR.
Our risk reporting platform is a proprietary solution that is fully integrated with our KIID/KID and SRRI/SRI solution, our PRIIPs services, our AIFMD reporting services, and our quantitative risk reporting services. This allows us to leverage significant economies of scale when working with another one of these services. Our platform is also connected to our pan-European tax reporting services, our fund registration services, our fund reporting services, and our quantitative cross-valuation services as part of our global outsourced reporting services.