The European Securities and Markets Authority (ESMA) has issued its advice to the European Commission, Parliament and Council in relation to the application of the AIFMD passport to non-EU Alternative Investment Fund Managers (AIFMs) and non-EU Alternative Investment Funds (AIFs). Among the group of non-EU jurisdictions assessed by ESMA (comprising Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the United States of America), Jersey and Guernsey are the only two in relation to which ESMA positively concludes that "no obstacles exist to the extension of the passport".
The six jurisdictions were selected based on factors including the amount of activity already being carried out by entities in these countries under the national private placement regimes (NPPRs), EU national authorities' knowledge and experience of dealing with their counterparts and the efforts by stakeholders in these countries to engage with ESMA's processes.
The advice is a welcome endorsement of the work undertaken in Jersey and Guernsey to make the jurisdictions as attractive as possible as domiciles both for funds and fund managers, following the implementation of the AIFMD and of the engagement of the Islands' authorities with their counterparts at ESMA. Many Jersey and Guernsey AIFMs and AIFs have taken advantage of NPPRs, largely meaning that it has been "business as usual" for funds marketed to EU investors.
Whilst marketing under NPPRs will continue to be an attractive option in many cases, should the AIFMD passport be activated:
- EU AIFMs would be able to market Jersey or Guernsey AIFs; and
- Jersey and Guernsey AIFMs would be able to apply for full authorisation under the AIFMD to allow them to market Jersey and Guernsey AIFs and also EU AIFs,
throughout the EU using the AIFMD marketing passport rather than having to comply with NPPRs.
The European Commission, Parliament and Council now have three months to consider whether to activate the relevant provisions of the AIFMD extending the passport to Jersey and Guernsey through a delegated act.
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