Foreword
The Guide to Sound Practices for Selecting and Periodically Assessing Administrators (the “Guide”) is the initiative of AIMA’s Sound Practices Committee.
AIMA first published this Guide in July 2017. Since the Guide was first published there have been considerable advances in the technology and the services available to managers and funds from administrators. This has had an effect on the services they can offer and the oversight required by managers and funds. There have also been developments in the regulatory environment which this new version of the Guide takes into account.
One important theme remains unchanged: managers and funds can outsource some functions to third parties such as administrators. However, they cannot outsource their responsibility to ensure those functions are discharged correctly and in a way that ensures they meet their obligations to investors. The Guide supports managers and funds in achieving this. We would like to thank the members of the working group (who are listed in Appendix A), all of whom have volunteered their time and worked hard to produce this update of a valuable Guide.
Table of contents
1. Introduction
2. Entity-level due diligence on administrators
2.1 Service offering
2.2 Technology capabilities
2.3 Organisation and governance
2.4 Compliance and controls
2.5 Recordkeeping
3. Investor services
3.1 AML/KYC/CTF
3.2 Transaction processing
3.3 Operationalising LRM tools
3.4 Transaction recordkeeping
3.5 Investor communications/reporting
4. Fund accounting and NAV guidelines
4.1 Trade lifecycle
4.2 Reconciliations
4.3 Corporate actions
4.4 Valuations
4.5 NAV calculation and reporting
4.6 Calculation of the manager’s fees
4.7 Expense calculations and monitoring
4.8 FX and share class accounting
4.9 Cash management
5. Specialty fund services
5.1 Middle office
5.2 Financial reporting
5.3 Investor reporting
5.4 Tax services
5.5 Regulatory reporting
5.6 Digital assets fund administration
5.7 Loan administration
5.8 Post-trade monitoring
6. Services for managers
6.1 Performance measurement
6.2 Performance attribution
6.3 Risk analytics
6.4 Internal sustainability/ESG analytics
7. Additional services
7.1 Company secretary
7.2 Funds of hedge funds
8. Administrator on-boarding
8.1 Administration agreement
8.2 SLAs and KPIs
8.3 Key commercial considerations
8.4 Review of fund documents
8.5 Management of operational transition
9. Periodic reassessment of retention of relationship with administrator
9.1 Relationship management and oversight
9.2 Performance versus KPIs and SLAs
9.3 Monitoring of incidents, reputation, regulatory sanctions
9.4 Board reporting
9.5 Due diligence refresh
10. Off-boarding/transitioning
10.1 Upfront operational considerations
10.2 Notification
10.3 Transition
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