ESMA continues to review third countries for the Alternative Investment Fund Managers Directive (AIFMD) passport

ESMA continues to review third countries

The AIFMD presumed that the passport would be extended to non-EU AIFMs and non-EU AIFs from July 2015. At that time, the European and Securities Markets Authority (ESMA) provided advice to the European Commission on the functioning of the passport and it extension to non-EU AIFMs and non-EU AIFs, but it provided a positive opinion on only three jurisdictions. The European Commission has not yet extended the passport to these jurisdictions and has now written to ESMA asking it to report again in June of this year on nine further jurisdictions.


Too early for Commission’s opinion on passports

In its advice to the Commission in July last year, ESMA noted that due to the delay in implementation of the AIFMD and of its transposition in some Member States, it was too early to provide a definitive opinion on the functioning of the passport. ESMA suggested a further opinion be prepared in future.

As regards the extension of the passport to non-EU AIFMs and non-EU AIFs, ESMA proposed this be done on a country-by-country basis. At that time, it had reviewed six non-EU jurisdictions but, partly due to time constraints, provided a positive opinion on only three – Jersey, Guernsey and Switzerland.

ESMA requests passport review by 30 June 2016

The Commission agreed that a country-by-country approach was appropriate, but we understand that it was reticent to extend the passport to only three jurisdictions in the first wave. It has now written to ESMA requesting that by 30 June 2016 it:

  • Complete its review oft the USA, Hong Kong and Singapore.
  • Review six other countries - Japan, Canada, Isle of Man, Cayman Islands, Bermuda and Australia.
  • Provide a more detailed assessment of the capacity of supervisory authorities and their track record in ensuring effective enforcement, including for the countries considered in the first wave.
  • Provide a preliminary assessment of the expected inflow of funds by type and size into the EU from relevant third countries.

On receipt of positive advice and opinion from ESMA, the Commission has up to three months to adopt a delegated act that will specify the date from which the AIFMD passport becomes available to AIFMs and AIFs in those jurisdictions. The European Parliament and the Council then have up to three months to object to the delegated act. This would point to the passport being extended to certain countries at the earliest by late autumn this year. From that date, the passport and national private placement regimes will co-exist for a period, originally envisaged to end in 2019. 

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