Esma’s Advice on the Application of the Aifmd Passport to Non-Eu Aifms and Aifs

On 30th July 2015 the European securities and markets authority (“ESMA”) issued its advice (the “advice”) on the opportunity to extend the so-called AIFMD (directive 2011/61/EU of the European parliament and of the council of 8 June 2011 on alternative investment fund managers) passport also to Non-EU alternative investment fund managers (“AIFMS”) and Non-EU alternative investment funds (“AIFS”).

ESMA’s country-by-country assessment has been focused on four main regulatory issues in the funds framework of six countries, whose AIFMs and AIFs have currently a prevalent impact in Europe (being the United States, Guernsey, Jersey, Hong Kong, Switzerland and Singapore, together the “Countries”), to find out whether each of them is compatible with the provisions of the AIFMD:

  1. Investor protection: in particular, how investor complaints are tackled by the local competent authorities, functions of depositaries and accuracies of disclosures to investors;
  2. Market disruption: risks for the activity of EU AIFMs due to the differences in regulatory environments and risks of reduction of the investor choice;
  3. Obstacles to competition: especially considering the treatments for EU AIFMs and AIFs in the foreign markets;
  4. Monitoring of systemic risk: reporting obligations for management companies.

Having analysed the various cooperation arrangements currently in place between the competent authorities in the respective EU Member States with those Countries, together with the feedback received from its call of evidence launched in November 2014, ESMA has provided the following advice.

  • Countries, to which there would be no obstacles for the extension of the passport:

         > Guernsey

         > Jersey

  • Countries, which would only need to remove few obstacles to have the passport granted:

        > Switzerland

  • Countries, to which the passport should not be extended at the current status:

         > United States
         > Singapore
         > Hong Kong

Now ESMA will continue to work on its assessment of other non-EU countries which were not covered in the current Advice in order to deliver, if possible, further submissions to the European Parliament, the Council and the Commission in the coming months. For the non-EU jurisdictions, which have currently no cooperation arrangements in place for the purposes of the AIFMD, ESMA will continue its efforts to agree a memorandum of understanding with the authorities concerned.

The so-called “Advice” will now be considered by the European Commission, the Parliament and the Council.