The AIFMD passport is currently only available to EU AIFMs and EU AIFs. However, AIFMD makes provision for access to the passport rights to be possibly extended to non-EU entities at a future date.
Although the European Securities and Markets Authority (ESMA) just recommended this extension to managers and funds established in Jersey, Guernsey and, potentially, Switzerland, investment manager and funds set up in the US, Hong Kong and Singapore will not be granted the same right at the present time.
On 30 July 2015, ESMA published two documents:
- The Opinion on the functioning of (a) the AIFMD passport for EU AIFMs pursuant to Articles 32 and 33 of the AIFMD and (b) the national private placement regimes (NPPRs) set out in Articles 36 and 42 of the AIFMD; and
- Its Advice on the extension of the AIFMD passport for non-EU AIFMs and AIFs in accordance with Article 35 and Articles 37 – 41 of the AIFMD.
The Opinion
EMSA has identified that in relation to the AIFMD passport notable differences exist among Member States in relation to (i) marketing rules and (ii) what amounts to "marketing" and "material changes". However, given the delays in the implementation of AIFMD in a number of jurisdictions, ESMA considered that a definitive analysis at this early stage would be difficult to conclude. Therefore, ESMA will be postponing the examination on both the functioning of the AIFMD passport, and the NPPRs, to a later date following a longer implementation period
ESMA's Opinion can be accessed by clicking here.
The Advice
ESMA assessed six possible non-EU jurisdictions that could benefit from the extension of the AIFMD passport. The recommendations of Jersey and Guernsey are not surprising since both jurisdictions are renowned for establishing fund rules based on EU legislation. Switzerland also got the nod – provided that certain amendments to the Swiss Federal Act on Stock Exchanges and Securities Trading enter into force. These amendments should be implemented by 1 January 2016 and, in ESMA's view, would strengthen FINMA's cooperation with non-Swiss regulators.
The rationale for not extending the AIFMD passport to the US, Hong Kong and Singapore seems to be based on competition, regulatory issues and insufficient data to adequately examine all relevant criteria. The approach, at least for the US, is more accurately a "delay" until "better conditions of market access are granted by the US Authorities to EU AIFMs/AIFs". US managers, along with those in Hong Kong and Singapore, will therefore continue to fall within the ambit of Article 42 of the AIFMD unless the EU Institutions choose to express a view that is different to ESMA's Advice.
In any case, ESMA's Advice will be the first step among several for Jersey, Guernsey and Switzerland.
The EU Commission now has three months to draw up a delegated act. The EU Council and Parliament will then have up to six months to debate the proposed legislation and may well send it back to the EU Commission for revisions – which would only reset the entire process. ESMA advised that it would therefore be best for the EU Institutions to wait for (possible) feedback on other non-EU jurisdictions before bringing forward any legislation.
ESMA's Advice can be accessed by clicking here.
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