ESMA issues advice on extension of the AIFMD third country passport19 July 2016
ESMA has today issued its second set of advice on the extension of the AIFMD third country passport in respect of 12 non-EU jurisdictions. ESMA has advised the European Commission, the European Parliament and the Council that:
- there are no significant obstacles impeding the application of the AIFMD passport to Canada, Guernsey, Japan, Jersey and Switzerland;
- if ESMA considers the assessment only in relation to AIFs, there are no significant obstacles impeding the application of the AIFMD passport to AIFs in Hong Kong and Singapore. However, ESMA notes that both Hong Kong and Singapore operate regimes that facilitate the access of UCITS from only certain EU Member States to retail investors in their territories;
- there are no significant obstacles regarding market disruption and obstacles to competition impeding the application of the AIFMD passport to Australia, provided the Australian Securities and Investment Committee (ASIC) extends to all EU Member States the ‘class order relief’, currently available only to some EU Member States;
- there were no significant obstacles regarding investor protection and the monitoring of systemic risk which would impede the application of the AIFMD passport to the United States. However, ESMA considers that in the case of funds marketed by managers to professional investors which do involve a public offering, a potential extension of the AIFMD passport to the US risks an un-level playing field between EU and non-EU AIFMs. The market access conditions which would apply to these US funds in the EU under an AIFMD passport would be different from, and potentially less onerous than, the market access conditions applicable to EU funds in the US and marketed by managers involving a public offering. ESMA suggests, therefore, that the EU institutions consider options to mitigate this risk;
- for Bermuda and the Cayman Islands, ESMA cannot give definitive advice with respect to the criteria on investor protection and effectiveness of enforcement since both countries are in the process of implementing new regulatory regimes and the assessment will need to take into account the final rules in place;
- for the Isle of Man ESMA finds that the absence of an AIFMD-like regime makes it difficult to assess whether the investor protection criterion is met.
This second round of advice on the extension of the third country passport follows ESMA’s initial advice delivered in July 2015 and an updated request from the Commission in December 2015 to complete the analysis in respect of some countries and to assess a further group of countries.
The Commission is empowered under Article 67 of the AIFMD to adopt delegated acts to give effect to the third country passport, taking into account ESMA’s advice and subject to there being no objection raised in relation to AIFMD objectives such as investor protection, market disruption, competition and the monitoring of systemic risk. Irish Funds will continue to monitor and engage on these developments.
To view the Irish Funds response to ESMA’s call for evidence on the extension of the AIFMD third country passport click here.