The European Securities and Markets Authority has issued on March 26 technical advice regarding information that must be provided by national regulators on the functioning of the Alternative Investment Fund Managers Directive as a precursor to the potential extension of the AIFMD passport to non-EU managers and funds after July next year.
ESMA has drawn up the report in response to a request from the European Commission on December 20 last year for advice on the possible content of its delegated act required under Article 67(5) of the AIFMD on the information regulators must provide quarterly to ESMA, and was delivered a month ahead of the Commission’s deadline of April 30.
The information to be provided by the national regulators will enable ESMA to advise the Commission on the planned opening up of the passporting system, which will become possible two years after the directive took effect on July 22, 2013 – the date from which, according to the directive, the regulators were originally due to begin providing information to ESMA.
The information concerns the functioning of the passport for EU alternative fund managers and of national private placement regimes for non-EU managers and funds, as well as issues arising from the functioning of both systems. ESMA says the input will enable it to co-operate closely with the European Commission to facilitate the rapid adoption of a delegated act extending the AIFMD passporting system.
The questions that ESMA proposes that national regulators answer include the number of managers authorised under the AIFMD, the number that are using the passport for managing or marketing funds in other member states, and that have set up cross-border branches, cases arising of rule breaches or misconduct by managers using the passport, and their outcomes, the functioning of co-operation arrangements and cross-border notification between national regulators, cases relating to systemic risk, and similar information relating to the distribution by private placement of non-EU funds or of EU funds run by non-EU managers.
The information to be requested on the functioning of the two systems includes any evidence of market disruption or distortion of competition between EU and non-EU managers, and of any difficulties faced by managers in established themselves or marketing their funds in other EU countries, or problems that have deterred managers from doing so.
The directive lays down that by July 22, 2015, ESMA should send the European Parliament, Council and Commission an opinion on the current functioning of the passport and national private placement regimes, and advice on application of the passport to third-country managers and funds in accordance with the rules set out in Article 35 and Articles 37 to 41 of the AIFMD.
Within three months of receiving of a positive opinion and advice from ESMA, the Commission is required to adopt the delegated act, specifying the date when these rules take effect in all member states, thus extending the passport to non-EU managers and funds.
It is planned for the Commission to adopt a delegated act formalising the requirement on national regulators to provide the information. Supervisors from member states that have not yet transposed the AIFMD are expected to start providing the information as soon as the directive has been incorporated into their legal systems.
Because the act will affect only regulators, ESMA sees no need to conduct a cost-benefit analysis or a consultation on the proposed advice. While supervisors are expected to have most of the information required to hand, ESMA says they may consider seeking input from the national industry associations, particular regarding any market disruption, access to other EU markets or competition issues.
ESMA is seeking information from regulators quarterly on alternative managers managing or marketing funds under their supervision, either via the passport or private placement, and every six months on market and competition questions. It proposes that regulators provide information for the first time on May 19 this year, for the period from July 22, 2013 to March 31, and thereafter on August 8, October 31 and January 31, 2015.
In our AIFM Directive blog on our website you may more information in relation to the AIFMD. Such blog can be viewed by clicking here (http://www.cs-avocats.lu/category/aifm-directive).