On 13 October, the European Securities and Markets Authority published a statement from the EU Parliament Economic and Monetary Affairs Committee on ESMA's ongoing work on the extension of the Alternative Investment Fund Managers Directive passport to non-EEA, i.e. Third Country, managers. This statement follows up the July 2015 advice, which ESMA provided to the EU Parliament, Council and Commission on the extension of the passport. ESMA assessed six Third Countries, concluding that there were no obstacles to extending the passport to Guernsey and Jersey and that Switzerland will remove any remaining obstacles. ESMA did not, however, reach a definitive view on Hong King, Singapore and the United States.
The statement indicates that the next steps for ESMA in the short term are to:
- Continue its assessment of Hong King, Singapore and the US with a view to reaching a definitive conclusion on whether to extend the Third Country passport to them.
- Begin assessing a second group of Third Countries: Australia, Canada, Japan, the Cayman Islands, the Isle of Man and Bermuda.
- Put in place the framework necessary for extending the passport to Third Countries which will involve preparing ESMA for its role in the functioning of the Third Country passport and strengthening supervisory co-operation.
As the statement highlights, the Directive requires ESMA to assess each Third Country on the following criteria: i) investor protection, ii) market disruption, iii) competition and iv) the monitoring of systemic risk. Where ESMA considers that there are no significant obstacles in relation to these four elements, ESMA should issue positive advice. The statement emphasised that ESMA has only assessed Third Countries from a regulatory standpoint since that is “clearly our area of responsibility and expertise”. Other issues, such as fiscal matters or anti-money laundering rules, might be relevant to the decision on whether to extend the passport, but ESMA does not consider itself as the appropriate body to look into those aspects.