Treatment of investment funds made up of different internal sub-funds

• Question ID: 2018/0023
• Date of publication: 24/01/2018
• Subject matter: Special categories of counterparties, Counterparty group structures, LEI and national identifiers
• AnaCredit Manual: Part II
• Data attribute: Legal Entity Identifier (LEI), Head office undertaking identifier, Counterparty identifier

Question

AnaCredit defines counterparties on the basis of institutional units. In this concept, a legal entity is broken down into a domestic entity and foreign branches (i.e. a distinction is drawn along national lines).

How should reporting agents treat investment funds which are made up of different internal sub-funds? The shares/units relating to each sub-fund are backed by different assets, yet they represent a single legal entity. Are these sub-funds separate counterparties according to AnaCredit, or should the entire investment fund be regarded as a single counterparty? Regulation (EU) No 1073/2013 concerning statistics on the assets and liabilities of investment funds states that each sub-fund must be regarded as a separate investment fund and must have its own LEI code.

Answer

While it is true that AnaCredit does not distinguish between a legal entity’s various units/offices in an individual country, reporting agents should regard each sub-fund as an individual investment fund and report data on sub-funds to AnaCredit accordingly.

AnaCredit regards each sub-fund as a counterparty in its own right (hence with its own counterparty identifier), regardless of how many sub-funds there are in the country. This is consistent with the fact that each sub-fund will typically have its own LEI code. Furthermore, Part II of the Manual (page 228, lines 8-13), indicates that, for each investment fund, including sub-funds, the counterparty identifier of the management company of the investment fund/sub‑fund should be reported in the data attribute “head office undertaking identifier”, and a counterparty reference data record should be submitted for the management company representing the fund where that fund acts as a debtor or a protection provider.

Furthermore, in view of the above (i.e. given that each sub-fund is regarded as a counterparty in its own right), loans granted to sub-funds should be reported individually, without any aggregation (e.g. at the level of the umbrella fund).

Finally, as regards the question of whether an investment sub-fund constitutes a separate legal entity or is part of a larger legal entity, it should be noted that, owing to the specific definition of a legal entity, this is different from the question of whether an investment fund has legal personality under the corporate law of the EU Member State where it is resident. Investment funds, just like any other entity acting as a borrower in its own capacity, will be capable of acquiring legal rights and obligations, because they are party to a credit arrangement under which they have a right to borrow and an obligation to repay. Consequently, loans granted to investment funds/sub-funds are always subject to AnaCredit reporting.

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See also Clarification regarding the legal form for special funds