The Central Bank of Ireland has clarified that with immediate effect, it will now permit the passporting of the services described in Article 6(4) of AIFMD both on an inwards (i.e. by EU AIFMs into Ireland) and on an outwards (by Irish AIFMs seeking to passport to other EU jurisdictions) basis.
The Central Bank has issued an updated AIFMD Q&A on 4 February 2014 revising responses to three questions, being IDs 1019, 1025 and 1026.
Q ID 1019. Where AIFMs are authorised to provide the services set out in Article 6(4) of the AIFMD will the Central Bank authorise AIFMs to passport Article 6(4) services across the EU or to provide such services in Ireland?
The previous answer had been to note that the EU Commission had stated in its interpretation of AIFMD that these services were essentially not passportable.
This position was contrary to that taken by certain other national regulators most notably the FCA in the UK who last year published a statement on the passporting of services authorised under Article 6(4) of AIFMD (the so-called 'MiFID services'). The FCA had noted at that time that the European Commission did not share the FCA’s view that a passport exists for such services under AIFMD, and that consequently some Host States might refuse a passport notification for the provision of MiFID-type services by a full-scope UK AIFM.
As reported in our January Funds e-zine, political agreement on the proposed revision of the Markets in Financial Instruments Directive (MIFID 2) was reached in January 2014. As part of that agreement, an amendment to Article 33 of AIFMD was introduced to make it explicit that the right to passport an AIFM’s services in other Member States extends to any services it provides under Article 6(4) (including MiFID-type services).
The Central Bank has amended their response to question ID 1019 accordingly to read as follows:
In light of the agreement on 14 January 2014 to amend Article 33 of AIFMD as part of the agreement reached in principle by the European Parliament and the Council on updated rules in markets in financial instruments (MiFID II), the Central Bank will, with immediate effect:
- Accept AIFM passport notifications from other national competent authorities where the notification includes services set out in Article 6(4) of AIFMD
- Process notifications from Irish authorised AIFMs who advise us of their intention of provide the Article 6(4) services, for which they have received an authorisation
It should be noted that some Member States may have already implemented into their national law the original view of the European Commission that there is no passport under AIFMD for these MiFID services. However, it is reported that the Commission's revised view is likely to be that a notification for a full-scope EU AIFM to provide MiFID-type services in another Member State should be accepted by the Host State regulator.
Changes to question ID 1025 clarify the timeframe during which the Central Bank expects to receive passporting notification from existing EU AIFMs managing Irish AIFs and confirms that under the transitional arrangements, applications for authorisation must be submitted by 22 July 2014. Accordingly the Central Bank expects to receive passport notifications in most cases by 22 October 2014 (being the three month period during which authorisation should be granted) and no later than 22 January 2015 (being the six month time limit set out in AIFMD).
The changes in relation to question ID 1026 are similar to those to 1025 as they relate to the time period in which the Central Bank expects to receive the passport notification in accordance with Article 33 (Conditions for managing EU AIFs established in other Member States).