MFA-AIMA STANDARD CERTIFICATION FIA TEMPLATE QUESTIONNAIRE DIRECT ELECTRONIC ACCESS ( DEA ) CLIENT REPRESENTATION

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1 MFA-AIMA STANDARD CERTIFICATION FIA TEMPLATE QUESTIONNAIRE DIRECT ELECTRONIC ACCESS ( DEA ) CLIENT REPRESENTATION MFA 1 and AIMA 2 (the Associations ) appreciate that FIA has created a template questionnaire to assist investment firms that provide DEA services ( DEA Providers ) with their MiFID II compliance and their obligation to conduct due diligence on clients that use DEA services ( s ). In light of the short timeframe in which s need to complete multiple questionnaires from their DEA Providers, oftentimes distinct questionnaires, the Associations have created a Standard Certification to FIA s template questionnaire for DEA due diligence. The purpose of the Standard Certification is to allow s to provide standardized client information and certification of a base-level of controls and practices consistent with MiFID II requirements. The Standard Certification is meant to assist DEA Providers in collecting necessary information from their s in a timely manner, so that trading continues after MiFID II rules become effective in January The Standard Certification is not meant to deter DEA Providers from seeking additional information that they deem necessary from s to fulfill their due diligence obligations under MiFID II. As DEA Providers are ultimately responsible for conducting due diligence of their clients trading in connection with the use of DEA, final satisfaction of due diligence requirements remain with the DEA Providers. The Associations do not represent that the Standard Certification by itself will satisfy a DEA Provider s due diligence obligations under MiFID II. The Standard Certification is not meant to limit the services that a DEA Provider or intends to offer or receive. 1 Managed Funds Association (MFA) represents the global alternative investment industry and its investors by advocating for sound industry practices and public policies that foster efficient, transparent, and fair capital markets. MFA, based in Washington, DC, is an advocacy, education, and communications organization established to enable hedge fund and managed futures firms in the alternative investment industry to participate in public policy discourse, share best practices and learn from peers, and communicate the industry s contributions to the global economy. MFA members help pension plans, university endowments, charitable organizations, qualified individuals and other institutional investors to diversify their investments, manage risk, and generate attractive returns. MFA has cultivated a global membership and actively engages with regulators and policy makers in Asia, Europe, North and South America, and many other regions where MFA members are market participants. 2 The Alternative Investment Management Association (AIMA) is the global representative of the alternative investment industry, with more than 1,900 corporate members in over 60 countries. AIMA s fund manager members collectively manage more than $2 trillion in assets. AIMA draws upon the expertise and diversity of its membership to provide leadership in industry initiatives such as advocacy, policy and regulatory engagement, educational programmes and sound practice guides. AIMA works to raise media and public awareness of the value of the industry. AIMA set up the Alternative Credit Council (ACC) to help firms focused in the private credit and direct lending space. The ACC currently represents over 80 members that manage $350 billion of private credit assets globally. AIMA is committed to developing skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) the first and only specialised educational standard for alternative investment specialists. AIMA is governed by its Council (Board of Directors). For further information, please visit AIMA s website, 1

2 STANDARD CERTIFICATION OF DEA CLIENT INFORMATION FIA Template Questionnaire A. DEA Due Diligence Questions for s Question / Description Response DEA Client Name DEA Client LEI A.1 Full legal name of the. A.2 Legal Entity Identifier (or equivalent) of the. (the "Firm"), on behalf of its advised funds/accounts. Jurisdiction A.3 Location of the. EEA: UK EEA: Other USA Other:(please specify) Authorisation Status A.4 Describe the legal status of the regarding access to European trading venues under MiFID II. For example, is the DEA Client authorized as an investment firm under MiFID II, exempt under MiFID II, etc. MiFID II Investment Firm UCITS Management Company AIFM Exempt: Third Country Other: (please specify) 2

3 Governance A.5 Please describe the governance and ownership structure of the. Partnership Limited Partnership Limited Liability Company Corporation Cooperative Other: (please specify) More information is available: On the Firm s Form ADV, Part I, Schedules A & B ( Through the Companies House portal ( Other: (please specify) A.6 Please describe the ability of the to meet its financial obligations to the DEA Provider. The Firm's funds/accounts maintain clearing arrangements with providers that contractually require daily margining. Other: A.7 Please disclose any disciplinary actions brought by EU regulators or by trading venues against the, which: Relate to the relevant trading activity; and Were brought within the preceding five year period. None Disclosed below: 3

4 DEA Client Activity A.8 Describe the s historical trading pattern and behaviour during the normal course of business on Relevant Markets 3 that will be accessed via the prospective DEA arrangement? (Please answer with reference to asset classes traded during the last 2 years, in what capacities and, trading frequency). Firm is a buy-side firm, trading in: Futures ETF (Exchange Traded Funds) Equities Options Other: The Firm is a pre-existing with two years of trading history with the DEA Provider. The Firm is a prospective or does not have a trading record of two years with the DEA Provider, and thus, provides the below information: Trading Strategies: Arbitrage Event Driven Special Situation Long / Short Long only Quantitative Research Others: (please specify) 3 Relevant Markets are defined in this template as any regulated market or multilateral trading facility authorised under Title III of Directive 2014/65/EU to which the prospective wishes to access through the DEA Provider. 4

5 A.8 (A.8 continued) Execution Strategies: Volume Participation VWAP TWAP MOO MOC Target Close Dark Liquidity seeking Others: (please specify) 5

6 A.9 Where the intends to undertake Relevant Markets to be accessed via the DEA arrangement, please give a general description of: The types of trading strategies; Any automated investment or execution strategies; The level of expected trading; and The level of expected order volume. The Firm is a pre-existing with two years of trading history with the DEA Provider and does not plan to make material trading changes from the prior two years with respect to the types of trading strategies, automated investment or execution strategies, the level of expected trading, or the level of expected order volume. The Firm does not satisfy the above criteria, and thus, provides the following information regarding its trading: Trading Strategies: Arbitrage Event Driven Special Situation Long / Short Long only Quantitative Research Others: (please specify ) Execution Strategies: Volume Participation VWAP TWAP MOO MOC Target Close Dark Liquidity seeking Others: (please specify) Expected Trading and Order Volume: 6

7 A.10 Will the be classified as a market maker (as defined in Article 4(1) (7) of MiFID II)? A.11 Will the have a direct relationship with the trading venue to which the DEA arrangement relates? A.12 Will the be classified as a clearing member in relation to any relevant CCP involved in a clearing process linked to the DEA Services? A.13 Please describe the operational setup and systems that the DEA Client uses or plans to use. Yes No Yes No Yes No The Firm uses: Proprietary Systems DEA Provider Systems Third-Party System: Other: (please specify) 7

8 A.14 Please describe all pre- and post-trade risk controls that the DEA Client applies or will apply to its trading strategies on the Relevant Markets to be accessed via the DEA arrangement. Pre-Trade Risk Controls: Price Collars Volatility Awareness Maximum Buy/Sell Quantity Limits Repeated Automated Execution Throttle Outbound Message Rate Market Data Reasonability Kill Switch Other: (please specify) Post-Trade Risk Controls: Post-Trade Limits Order Fill Validity Drop Copy Order Reconciliation Other: (please specify) A.15 If the is using - or plans to use - third party trading software, please describe the pre-trade controls provided. Does not plan to use third party trading software. Plans to use DEA Provider trading software. Plans to use third party trading software. See above (A.14) for a description of pre-trade risk controls. 8

9 A.16 Please describe the real-time monitoring systems the applies or will apply to its trading strategies on the Relevant Markets to be accessed via the DEA arrangement have in place? The Firm uses: Real-time monitoring to ascertain that the Firm s DEA trading strategies are performing as intended. Human supervision during trading hours from Trading and Risk Control functions/departments. Monitoring programs to provide real-time alerts to assist staff in resolving issues in a timely manner. Internal procedures, which are designed to ensure issues are resolved in a timely manner. Other: (please specify) A.17 Please describe the responsibilities within the for dealing with actions and errors. The Firm has: Escalation procedures to alert key control functions/departments of significant Firm DEA trading strategies systems issues. Internal policies and procedures, which require the reporting of actions and errors to an independent control function. Identified, for regulatory actions and errors, individuals from its Trading, and Compliance and/or Risk Control functions/departments to serve as points of contact for trading venue personnel. Other: (please specify) 9

10 B. Clients Providing DEA service to their clients through Sub-Delegation 4 [please complete] Question / Description Response Sub- Delegation B.1 Are you providing Sub-Delegation? (Yes / No) Yes No B.2 Do you comply with the requirements set out in Article 22(3) of RTS 6? Yes No Not Applicable B.3 Do you carry out an annual due diligence assessment (as per Article 23 of RTS 6)? B.4 Are you using a due diligence framework which covers substantively the same topics as this questionnaire? Yes No Not Applicable Yes No Not Applicable 4 This section is only relevant where a DEA Provider allows its s to offer sub-delegation. 10

11 C. Submission and Contacts [please complete] DEA Provider Name Compliance Contact DDQ Submitted by Date of DDQ Submission 11