European Securities and Markets Authority (Esma) has published its advice on the application of the Alternative Investment Fund Managers Directive (AIFMD ) to non-EU countries including Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the United States of America (USA).
While Esma advised to extend the AIFMD passport to Guernsey and Jersey, Switzerland will have to remove any remaining obstacles with the enactment of pending legislation.
Esma did not reach a definitive view on Hong Kong, Singapore and the USA due to concerns related to competition, regulatory issues and a lack of sufficient evidence to properly assess the relevant criteria, the regulator stated.
Geoff Cook, chief executive, Jersey Finance, commented: “Jersey’s private placement route into Europe continues to be actively used, with AIFMD not appearing to have stymied fundraising activities for Jersey funds at all. Nevertheless, this announcement from ESMA is a ringing endorsement of Jersey’s alternative fund regulatory framework and reinforces just how important it was for Jersey to become the first offshore jurisdiction to offer an opt-in AIFMD-compliant regime back in 2013. Overall, this announcement opens up considerable options to managers so that, whatever their strategy and target markets, they can rely on Jersey as a hub from which to offer highly flexible routes to investors in Europe and beyond.”
Ben Robins, chairman, Jersey Funds Association, added: “This is a fantastic development for Jersey that could position it right at the forefront of domiciles serving the global funds industry and particularly underlines its role as a specialist centre for alternative funds benefitting European investors. Managers have long appreciated Jersey’s security and stability and its dedicated “Anglo Saxon” approach to client service as a high quality, rather than high volume, jurisdiction. ESMA’s announcement confirms the appealing optionality of our platform and reinforces why managers continue to have confidence in Jersey’s appropriately flexible regime for alternative funds business.”
The Esma advice and opinion has now been sent to the European Commission, Parliament and Council for consideration, however, the institutions may decide to extend their decision until a sufficient number of non-EU countries has been found to be suitable for the Aifmd expansion.
The extension of AIFMD to the respective countries would mean that locally domiciled fund managers could offer alternative investment funds under the AIFMD banner, which could facilitate distribution of alternative investment funds across Europe.