Decoding the SEC’s Latest Form PF Amendments: What You Need to Know Before the March 2025 Deadline

The SEC’s latest changes to Form PF are here, and they’re shaking things up in a major way for US private fund advisors. Forget business as usual—these changes require a holistic review of existing reporting methodologies and processes. This represents a significant challenge for private fund advisors and their service providers, but it can also serve as an opportunity to take a strategic view of Form PF reporting operations and how they can be enhanced for the long term.

In SEC’s third and most substantial set of changes to Form PF in under 12 months, Sections 1 and 2 are given a major makeover, and with a March 2025 compliance deadline, Form PF filers need to move quickly to respond.

So, why the big change? The SEC, CFTC, and Financial Stability Oversight Council (FSOC) want a clearer picture of the systemic risk associated with private funds’ activity in markets. In working with the data submitted on Form PF over the course of the form’s first decade, FSOC has identified areas where the existing form results in blind spots or ambiguity, and the recently adopted changes are aimed at addressing those shortfalls.

In this post, we take a closer look at the adopted Form PF revisions, dig into the challenges that they represent, and consider how Form PF filers can start to prepare for the fast-approaching compliance date.

While the adopted Final Rule makes at least small adjustments to virtually all parts of Form PF and impacts all filers (we identified over 50 distinct changes across Sections 1 and 2!), the changes are particularly impactful for large hedge fund advisors. Focusing in on this group of filers, there are a few areas where the changes pose a particularly potent compliance challenge:

1. Changes to Fund Structure Reporting
   One of the significant changes involves how funds report their structures, particularly concerning master-feeder and parallel fund arrangements. Previously, firms could report master-feeder and parallel fund structures in aggregate, but the new requirements mandate separate reporting of these entities. Feeder funds investing only in the master fund, cash, cash equivalents, and U.S. Treasuries can be disregarded from reporting, providing a bit of respite. But, on the other hand, filers will now have to submit a separate Section 2 for feeders to hedge funds that don’t meet the requirements to be disregarded and that have over $500 million in net assets—a major new burden.
2. More Detailed Investment Exposure Reporting for Qualifying Hedge Funds
   For Qualifying Hedge Funds (those with over $500 million in net assets), the amendments also introduce more granular reporting requirements for investment types and asset classes. First, the asset type exposure breakout has been restructured, with an increased focus on reference assets: in calculating gross exposures, each investment in a fund’s portfolio must be classified by the asset class of the underlying security and filers must now also identify the instrument type of each investment, specifying whether the exposure to the underlying security is achieved directly, synthetically in a derivative transaction, or indirectly through investment in a fund. Additionally, a new adjusted exposure breakout requires funds to net offsetting positions in the same reference asset across instrument types, and large concentrations in a single reference asset must be reported on a security-by-security basis.
3. More Detailed Counterparty Exposure Reporting for All Hedge Funds
   The updated Sections 1 and 2 also introduce new consolidated counterparty exposure tables. On one hand, these tables simplify reporting by bringing previously disparate questions about borrowings, counterparty credit exposure, and margin/collateral into a single central location. On the other hand, the level of detail that must be reported is increased. This is especially true for Qualifying Hedge Funds, which must complete a separate consolidated counterparty exposure table for each of a fund’s five largest debtor and creditor counterparties.
4. New Look-through Requirements
   New look-through requirements bring an additional dimension of complexity to the updated investment and counterparty exposure questions. Filers will now be required to look through trading vehicles (defined as legal entities that hold assets, incur leverage, or conduct trading on behalf of a fund but do not operate a business), meaning that all underlying investment and counterparty exposure obtained through such vehicles must be reported as if the activity is in the fund itself. For large counterparty exposures, filers will have to separate direct exposures and those obtained through trading vehicles by identifying the exposed entity. In addition, Qualifying Hedge Funds will be expected to look through investments in other funds, including unaffiliated funds, and at least estimate asset class exposure based on the investee fund’s asset allocation.