The European Securities and Markets Authority (ESMA) has published:

  1. Its Advice on the application of the AIFMD passport to non-EU Alternative Investment Fund Managers (AIFMs) and Alternative Investment Funds (AIFs); and
  2. Its Opinion on the functioning of (a) the passport for EU AIFMs; and (b) the national private placement regimes (NPPRs).

The Advice relates to the possible extension of the passport to non-EU AIFMs and AIFs. ESMA carried out a country-by-country assessment of 6 jurisdictions: Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the United States. The Advice concludes that “no obstacles exist to the extension of the passport to Guernsey and Jersey, while Switzerland will remove any remaining obstacles with the enactment of pending legislation. No definitive view has been reached on the other three jurisdictions due to concerns related to competition, regulatory issues and a lack of sufficient evidence to properly assess the relevant criteria“.

ESMA will finalise the assessments of Hong Kong, Singapore and the US as soon as practicable; before going on to assess other groups of non-EU countries, until it has provided advice on all of the countries it thinks should be included in the passport extension.

The Opinion gives ESMA’s preliminary assessment on the functioning of the intra-EU passport and the NPPRs – viz: that it’s too early to make “a definitive assessment of their functioning“.  Another Opinion is likely to follow.

The Advice and Opinion have been sent to the Commission, Parliament and Council, so they can decide whether to activate the passport through a Delegated Act. However, they may wait until they have ESMA’s advice on some other countries before making a decision, “to avoid an adverse market impact that a decision to extend the passport to only a few non-EU countries might have” [Possible translation: to avoid regulatory arbitrage, in the meantime.]

We’ll prepare and publish a Client Alert, which looks at the Advice and Opinion in more detail, from the perspective of a north American fund manager, seeking to raise a North American fund, with access to potential investors inside and outside the EEA, shortly. More to follow…