Arrangements allow EU securities regulators to supervise non-EU alternative fund managers and thereby allow such managers access to the EU.
On 30 May, the European Securities and Markets Authority (ESMA) announced that it had approved cooperation arrangements between EU securities regulators that have responsibility for the supervision of alternative investment funds (AIFs)—including hedge, private equity, and real estate funds—and 34 of the regulators' global non-EU counterparts. ESMA negotiated the arrangements on behalf of all 27 EU Member State securities regulators as well as the authorities from Croatia, Iceland, Liechtenstein, and Norway.
These cooperation arrangements are a key element for allowing EU securities regulators to supervise the way non-EU alternative investment fund managers (AIFMs) comply with the rules of the EU Alternative Investment Fund Managers Directive (AIFMD), and they are a precondition for allowing non-EU AIFMs access to EU markets and investors or to perform fund management activities on behalf of EU AIFMs. These arrangements will apply to non-EU AIFMs that manage or market AIFs in the EU and to EU AIFMs that manage or market AIFs in third countries. The arrangements also cover cooperation in the cross-border supervision of AIFs' depositaries and AIFMs' delegates.
At its recent meeting, ESMA's board of supervisors approved Memoranda of Understanding (MoUs) with 34 regulators, including jurisdictions such as the United States, Canada, Brazil, India, Switzerland, Australia, Hong Kong, Singapore, the Cayman Islands, and the Channel Islands.
The key elements of the cooperation arrangements are as follows:
- EU and non-EU authorities will be able to supervise fund managers that operate on a cross-border basis both within the EU and outside.
- The cooperation between authorities includes the exchange of information, cross-border on-site visits, and assistance in the enforcement of the respective laws.
- EU securities regulators will be able to share relevant information received from non-EU authorities with other EU authorities, ESMA, and the European Systemic Risk Board, provided appropriate safeguards apply.
- The cooperation arrangements are applicable from 22 July 2013 and enable cross-border management and marketing of AIFs to professional investors in the EU.
Steven Maijoor, ESMA chair, commented that
The approval by EU securities regulators of these co-operation arrangements is a significant step towards the successful implementation of the supervision of alternative investment funds by the July 2013 deadline, and their negotiation is a key achievement for ESMA in its co-ordinating role for EU securities markets.The agreements set high standards for cooperation on the supervision of cross-border alternative funds, thereby strengthening investor protection and the global consistency of supervision.
ESMA continues to negotiate MoUs with additional third countries in order to meet the 22 July deadline.