Research

An update and summary provided by EMPEA Member Owen Lysak of Clifford Chance

 

ESMA published Advice to the European Parliament, the Council and the Commission on the application of the AIFMD passport to non-EU AIFMs in July, 2015. On July 18, 2016, ESMA published its further Advice addressing the possibility of extending the AIFMD marketing passport to non-EU based fund managers, and the non-EU countries which could be able to benefit from the passport.

In 2015 ESMA published advice on six non-EU countries, setting out that the AIFMD passport could be extended to Jersey, Guernsey and potentially Switzerland, but noting that further consideration was needed to be given to the US, Singapore and Hong Kong.

The European Commission then asked ESMA to consider a further six non-EU countries (Australia, Bermuda, Canada, Cayman Islands, Isle of Man and Japan).  This latest ESMA Advice covers both these six and the original open jurisdictions (the US, Singapore and Hong Kong). Among the points covered, the AIFMD passport could be extended to Canada, Guernsey, Japan, Jersey and Switzerland and the ESMA view on the US was more positive this time around.

 

In overview, the latest ESMA advice sets out that:

• The AIFMD passport could be extended to Canada, Guernsey, Japan, Jersey and Switzerland.
• Bermuda and the Cayman Islands require further analysis.  Both Bermuda and the Cayman Islands have been reforming their local fund marketing rules, and ESMA feels they will need to make a further assessment of both countries once those rules have settled down.
• The ESMA view on the US is more positive this time around, and suggests that the AIFMD passport could be extended to the US.  ESMA has noted, however, that extending the passport to the US could create an unlevel playing field in respect of any funds marketed to the public (because of differences between the US and EU regimes around public offering of funds).  ESMA’s suggestion is that the European Commission might want to consider only extending the passport to certain types of US funds (for example, limiting it to marketing to professional investors, and not publicly offered funds). 
• It is possible that the AIFMD passport could be extended to Australia, if Australia were to extend a local licensing exemption to all EU countries (currently only some EU countries can benefit from that exemption).
• It does not seem at this stage that the AIFMD passport would be extended to the Isle of Man.
• For Hong Kong and Singapore, it is not clear whether the AIFMD passport would be extended to fund managers there.