INDOS Financial awarded Cyber Essentials Plus certification
Independent AIFMD depositary, INDOS Financial, has obtained Cyber Essentials Plus certification. The certification involved subjecting the firm to an independent review of its IT and cyber controls, including vulnerability scanning of the firm’s infrastructure.
INDOS recognises the importance its clients place on the appropriate management and reduction of IT / cyber risk and believe that the government accredited Cyber Essentials Plus programme was a practical way of demonstrating this. The review was conducted by security specialists Pen Test Partners (www.pentestpartners.com).
European Commission AIFMD Review – Industry Questionnaire – Responses invited
The Directorate General for Financial Stability, Financial Services and Capital Markets Union of the European Commission (DG FISMA) has mandated KPMG to provide a comprehensive study on how the “Directive of Alternative Investment Fund Managers” (AIFMD) has worked in practice and to what extent its objectives have been met. Further details are below however broad industry input is being sought to the review and the survey can be found by clicking here.
The assessment includes a general overview regarding the functioning of specific AIFMD requirements and how they work in practice, including:
a) the marketing by EU AIFMs of non-EU AIFs in the Member States taking place through national regimes;
b) the marketing of AIFs in the Member States by non-EU AIFMs taking place through national regimes;
c) the management and marketing of AIFs in the Union by AIFMs authorised in accordance with this Directive taking place through the passport regime provided for in this Directive;
d) the marketing of AIFs in the Union by or on behalf of persons or entities other than AIFMs;
e) the investment into AIFs by or on behalf of European professional investors;
f) the impact of the depositary rules set out in Article 21 of the AIFMD on the depositary market in the Union;
g) the impact of the transparency and reporting requirements set out in Articles 22 to 24, 28 and 29 of the AIFMD on the assessment of systemic risk;
h) the potential adverse impact on retail investors;
i) the impact of the AIFMD on the operation and viability of the private equity and venture capital funds;
j) the impact of the AIFMD on the investor access in the Union;
k) the impact of the AIFMD on investment in or for the benefit of developing countries;
l) the impact of the AIFMD on the protection of non-listed companies or issuers provided by Articles 26 to 30 of the AIFMD and on the level playing field between AIFs and other investors after the acquisition of major holdings in or control over such non-listed companies or issuers.
The study is focused on 15 EU Member States, but respondents from any countries (including non-EU) are welcome. We are carrying out an online survey until 15 March, which seeks input from the wide range of stakeholders impacted by the AIFMD, including AIFMs, depositaries, investors, distributors and asset managers. We are asking for views on the AIFMD’s requirements, experience in applying them and the market impacts.
The online survey will be complemented by an evidence-based study assessing whether the AIFMD is effective, efficient, relevant and coherent and has had added value for the EU.
Broad industry participation is encouraged and the link to the survey is here.
Assets under depositary increase by 54% to over $20bn
INDOS Financial Limited (“INDOS”), the UK independent depositary, has passed the milestone of undertaking depositary services for 100 alternative investment funds with assets over $20bn. These figures represent a substantial growth in the business of 37% in the number of funds (from 73) and 54% in assets under depositary (from $13bn) since end-December 2016.
Welcoming this rapid business growth, Bill Prew, INDOS CEO explained that the added value arising from the employment of an independent depositary, as opposed to a depositary affiliated to the fund administrator, was becoming increasingly recognised by fund managers, fund directors and investors.
“In many cases,” said Mr Prew, “depositary services are viewed as a tick-box subset of fund administration but this model inevitably results in conflicts of interest given that one of the key roles of a depositary is to oversee the output of the administrative function and flag up problems.”
“INDOS is responsible for reviewing each NAV calculation and providing the fund manager and the Board with regular, tailored reports,” Mr Prew added, pointing out that INDOS is actively present (either in person or via telephone) at the majority of fund board meetings. “By contrast many managers who transfer their depositary requirements to us say they had little active engagement with their (former) depositary and were very rarely notified of issues whether at their affiliated administration business or otherwise. In several cases we have identified issues following take-on that clearly existed previously but were either not identified or went unreported”.
Other factors have made an important contribution to the firm’s expansion. Originally founded to provide ‘depo-lite’ services to hedge funds as the AIFMD (Alternative Investment Fund Managers Directive) came into force, INDOS has now broadened its range to include private equity and real estate funds, some 27 of which are now clients. Since May 2017, the firm has evolved further to offer full depositary services to UK unauthorised funds such as investment trusts and has recently announced two new clients in this area.
“An important feature of the increasingly strict regulatory environment in which investment managers now operate is the responsibility to achieve value for money from all external service providers,” said Mr Prew. “INDOS has achieved the scale and industry reputation where it regularly competes as an independent depositary against affiliated providers for larger mandates, delivering a tailored, value-add and more cost-effective service to clients”.
INDOS Financial specialises in providing independent AIFMD depositary services to alternative investment funds. INDOS was the first FCA authorised AIFMD Depositary in January 2014 and currently provides depositary services to 100 funds that have more than $20bn in assets. Clients include EU and non-EU managers managing a broad range of open and closed ended alternative investment fund strategies ranging from hedge funds, to private equity, real estate and other closed ended funds such as UK investment trusts.
The firm holds regulatory permissions to undertake both depositary-lite and full depositary business. INDOS’ team of experienced staff utilises its own proprietary DEPOcheckTM system, an integrated workflow management and automated monitoring solution to deliver efficient solutions to its clients. INDOS has been recognised as Best Depositary Solution for two consecutive years in the 2016 and 2017 HFM Service Awards.