After greenlighting Guernsey and Jersey in July, the European Securities and Markets Authority (ESMA) has begun to assess whether Australia, Canada, Japan, the Cayman Islands, the Isle of Man and Bermuda should be eligible to seek a pan-EU marketing passport provided by the Alternative Investment Fund Managers Directive (AIFMD), reported PDI sister title pfm.
Since 2014, ESMA has been evaluating an initial group of six non-EU countries—Guernsey, Jersey, Hong Kong, Switzerland, Singapore and the US—to determine whether they should be allowed to market across EU borders under AIFMD. In July, ESMA gave its blessing to Guernsey and Jersey and said Switzerland would also be approved following tweaks to its legislation. ESMA said it would need more time, however, to assess the regulatory rigor of the other three jurisdictions.
In a speech to the European Parliament’s Economic and Monetary Affairs Committee yesterday, ESMA chair Steven Maijoor noted that while ESMA will continue its assessment of the first group, it will also begin assessing the second group of six, noting that it made more sense to base the creation of a non-EU passport on a larger sample of countries.
“It must be said that there is no perfect way to select non-EU countries but we made our selection of jurisdictions taking into account a number of factors including the amount of activity already being carried out by entities from these countries under the [national private placement regimes], the existing knowledge and experience of EU [national competent authorities] with respect to their counterparts in these jurisdictions and the efforts made by stakeholders from these countries to engage with the process,” Maijoor stated.
Although ESMA’s recently-published 2016 Working Program notes that the decision on whether or not to extend a passport to third country managers would be due to the European Commission by Q4 2016, in the meeting Maijoor indicated that the regulator may speed up that timeline. The Commission intends to set a new deadline for ESMA, likely March 2016.
This new opinion will include a further review of the countries that have not yet received positive assessment (Singapore, Hong Kong and the US) as well as the second wave of jurisdictions, this publication understands.
The news of the second round of assessments has been welcomed in Cayman, which is implementing an AIFMD equivalent regime similar to the opt-in approach taken by Guernsey, noted Mourant Ozannes partner Robert Duggan.
“On the basis that Guernsey is satisfactory to ESMA, there’s every expectation that Cayman will be acceptable to ESMA as well,” Duggan said. Duggan does not anticipate conditional approval from ESMA of the new regime (as was the case for Switzerland), which is expected to be implemented before ESMA completes its assessment early next year.
ESMA’s decision not to clear the US for a passport in July was met with disappointment from the US private funds community. ESMA said it needed more time to assess the regulatory rigor of the US, which fund managers are hoping it will approve by the new March deadline.