ESMA’s advice and opinion on EU passport and national private placement regimes

On 30 July 2015, the European Securities and Markets Authority ("ESMA") published (i) its advice for the European Commission, Parliament and Council on the potential extension of the EU passport to non-EU countries under Directive 2011/61/EC of 8 June 2011 on alternative investment fund managers ("AIFMD") and (ii) its opinion on the functioning of the EU passport and national private placement regimes ("NPPRs") under AIFMD.

Currently, non-EU Alternative Investment Fund Managers ("AIFMs") and EU AIFMs of non-EU Alternative Investment Funds ("AIFs") can only market their AIFs in Member States when authorized by the relevant NPPR.

While ESMA has so far assessed six non-EU jurisdictions (Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the US), its advice states that there are no obstacles to extending the passport to AIFs and AIFMs in Guernsey, Jersey and Switzerland (subject to certain amendments under Swiss law). As regards Hong Kong, Singapore and the US, ESMA indicated that there is currently a lack of evidence for appropriate assessment, hence the completion of such assessment has been postponed until the earliest possible opportunity, along with other jurisdictions.

Furthermore, ESMA highlighted issues relating to the use of the passport, including divergent approaches by Member States to marketing rules, especially interpretations of “marketing” or “reverse solicitation” definitions.

ESMA’s opinion concludes that there is currently a lack of evidence to accurately determine whether the EU passport or NPPRs have revealed critical issues in the implementation of the AIFMD legal regime. Lastly, ESMA expects a further opinion on the functioning of both the passport and the NPPRs in all Member States once the implementation period has elapsed. It is now up to the Commission, Parliament and Council to reach their conclusions based on this advice and opinion.

ESMA’s advice, opinion and press release can be found here.