A review of AIFMD is under way. Here Dr Andy Sloan, Acting Director of Strategy at Guernsey Finance, reminds us that NPPR is proven, faster and cheaper than the passport, and suggests that managers need look nowhere else than Guernsey
KPMG Germany was recently appointed by the European Commission to undertake a review of the operation of AIFMD. This independent review is part of the Commission's review of AIFMD which was, as they say, 'always in the programme' as a result of having been hardwired into the original wording of the Directive. The survey itself is only aimed at 15 Member States, but submissions from third countries are welcomed here.
It is in the interests of Guernsey managers and administrators to respond to the survey. After all, having a complete picture will be valuable for the review, and Guernsey's policy and strategy towards the EU has always been one of open and honest engagement and co-operation. It is why we are respected within ESMA and the Commission, our regulatory regimes are recognised for what they are, and we have a strong track record of success in the equivalence process.
It is not for me to say, but this appointment has a bit of the look of a civil service trick of trying to kick the process into the long grass, or at least the can a little further down the road. Pure speculation, but I doubt the European Commission is in any hurry to draw significant conclusions on the operations on the operation of AIFMD, seven years after its introduction, given the Member State with the biggest market is in the process of leaving. It's a rather open secret that the Brexit vote stalled the introduction of the third country passport, despite two rounds of ESMA approval of the Channel Islands' 'full fat' AIFMD regimes. It is another open secret that Brexit is the reason why the European Commission is not in a position to make any major revisions to third country regimes generally.
So we will probably have to wait a while for substantive conclusions to be drawn from the whole review process. Which is a shame because there are a few truisms about the operation of the third country regime that would have benefitted from being officially drawn out.
Truisms such as the proven nature of NPPR and its competitive proposition versus the passport. The vast majority of international investors are looking primarily to access the UK market. That, plus the coverage of the five or six key major jurisdictions where NPPR is working perfectly well, fully meets managers' distribution requirements more or less every time – NPPR reaches the parts of the EU market that managers want to meet. And it's also faster and cheaper than the passport, more often than not.
Given it's been confirmed on numerous occasions that NPPR will not be withdrawn by national regulators ahead of the introduction of a third country passport, there are few reasons for international investors not to choose Guernsey and its proven NPPR route, particularly in these turbulent pre-post Brexit times.
With the extra reassurance of the stability and security of investing through Guernsey, growing recognition of our 'four corners of the globe' distribution capabilities, and suite of flexible fund solutions, there is no surprise that 2018 is seeing renewed growth and confidence in the Guernsey funds sector.
For more information about Guernsey's finance industry please visit www.weareguernsey.com.
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