IFIA responds to ESMA call for evidence on the AIFMD passport for non-EU AIFMs8 January 2015
The extension of the AIFMD passport would be a very significant development in the context of the European funds industry, requiring careful consideration. ESMA has outlined a country-by-country approach to granting the passport based on criteria relating to investor protection, risk of market disruption and monitoring of systemic risk. ESMA poses a range of questions relating to the functioning of the passport and national private placement regimes under AIFMD in order to help it assess the potential impact of extending the AIFMD passport.
The IFIA has responded that it is too soon to be able to meaningfully assess the operation of the AIFMD passport regime, given the implementation delays across Member States combined with the decision by many EU asset managers to avail of transitional arrangements. The IFIA recognises an eventual extension of the passport could increase investor choice and likely promote competition within the EU. However, in extending the passport it would be critically important to ensure that non-EU AIFMs and AIFs are subject to equal levels of regulation and oversight in the interest of investor protection and in order to safeguard a level playing field. Also, to prevent distortion of competition, IFIA encourages ESMA to take into account reciprocity of market access for EU AIFMs into each non-EU jurisdiction to which the passport would be extended.
AIFMD contemplates that a non-EU AIF, upon securing a marketing passport, would be required to appoint a depositary located in its home jurisdiction, in the home Member State of the AIFM, or in the Member State of Reference (which is to be determined under a complex set of criteria relating to where most of the marketing and/or management would be done). This raises a range of concerns that could potentially create unnecessary market disruption, risk, uncertainty and confusion for investors. Therefore, IFIA is proposing that any non-EU AIF being marketed to EU investors under an extension of the AIFMD passport should additionally be permitted to appoint a depositary located anywhere in the EU.
Further responses highlight challenges related to the lack of a uniform definition of “marketing” across the EU, as well as additional requirements and varying levels of registration and regulatory fees imposed by different Member States.
ESMA is required to submit by 22 July 2015 its opinion to the European Commission, which will be guided by ESMA’s view as to whether the AIFMD passport should be opened up to non-EU AIFs and AIFMs.