Alternative Investment Industry Technical Update: SEC, FASB, CFTC, AICPA, Cayman Islands Government

We are pleased to share this Technical Update on recent changes impacting the alternative investment industry. This month you will find a brief summary of the following:

SEC:
  • Guidance Update and Investor Bulletin on Robo-Advisors
    • Robo-advisors are registered investment advisors that use computer algorithms to provide investment advisory services online with often limited human interaction.
    • Management issued guidance with suggestions on meeting disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940.
    • The Investor Bulletin outlines important factors to consider before choosing a robo-advisor. Investors can use the SEC’s database to research the background, including registration or license status and disciplinary history, of any individual or firm.
    • Click here to read this SEC update.
FASB:
  • 2017-05 Gains and Losses from the Derecognition of Nonfinancial Assets
    • This update clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. An in substance nonfinancial asset is a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets that are promised to the counterparty in the contract is concentrated in nonfinancial assets.
    • Click here to read this FASB guidance.
  • 2017-06 Plan Accounting
    • This update relates primarily to the reporting by an employee benefit plan for its interest in a master trust. A master trust is a trust for which a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.
    • This update clarifies presentation requirements for a plan’s interest in a master trust and requires more detailed disclosures of the plan’s interest in the master trust.
    • Click here to read more about these FASB requirements.
CFTC:
  • Variation Margin and No-Action Relief from Minimum Transfer Amount Provisions
    • Without a proper transition, Division of Swap Dealer and Intermediary Oversight (DSIO) believes there could be a significant impact on the ability to hedge positions for pension funds, asset managers, and insurance companies that manage Americans’ retirement savings and financial security.
      • From 3/1/17 to 9/1/17, DSIO will not recommend an enforcement action against a swap dealer for failure to comply with the variation requirements.
    • Click here to read this CFTC update.
  • No-Action Relief for Swap Dealers Doing Business in EU
    • Without a comparability determination by the CFTC with respect to the European Markets Infrastructure Regulation (EMIR) Regulatory Technical Standards (RTS), many swap dealers operating in the EU will be required to comply with both the Final Margin Rule and the EMIR RTS. The DSIO believes relief is necessary to give swap dealers certainty about their regulatory obligations while the CFTC undertakes its substituted compliance determination and the European Commission (EC) its equivalence decision.
    • Click here to read more about this CFTC guidance.
AICPA:
Cayman Islands Government:
  • The Cayman Islands government issued an information notice extending the CRS notification (i.e. portal registration) deadline from April 30, 2017 to June 30, 2017 and the 2016 calendar year data reporting deadline from May 31, 2017 to July 31, 2017.
  • The Cayman Islands Tax Information Authority (TIA) is expected to issue revised CRS guidance Notes later this month.
  • For more information please see our full update by clicking here.

We welcome your suggestions for future topics that you would like to see included in this Technical Update. Also, for further information regarding these updates and how you may be affected by these changes, please contact your Arthur Bell representative at 855-787-0001 or via email at contactus@arthurbellcpas.com.

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