Published: 22nd July 2016

Of relevance to:
AIFMs; non-EU fund managers


Although the AIFMD marketing passport simplifies the marketing of EU AIFs by EU AIFMs, under the current AIFMD regime, the marketing by non-EU AIFMs and EU AIFMs of non-EU AIFs is subject to the national private placement regime (“NPPR”) of each Member State (provided that the conditions in Articles 36 and 42, as relevant, are adhered to). As many fund managers will be aware, the existence of AIFMD Articles 36 and 42 combined with NPPR does not mean that marketing is assured in Member States.

Although the AIFMD provides for a marketing passport for a non-EU AIF by an EU AIFM (Article 35) and for a marketing and/or management passport for non-EU AIFMs (Article 37 – 41), this is subject to advice provided by ESMA on the extension of the passports.

Rather than a blanket approach, ESMA has adopted a country-by-country assessment: the first review took in Guernsey, Jersey, Switzerland, Hong Kong, Singapore and the US and was published in July 2015 – see Regulatory Roundup 66. Basically it was a thumbs-up to the first three jurisdictions and a delay in the decision for the latter three. Barely three months later (see Regulatory Roundup 69), the ESMA Chairman announced that the second round of non-EEA country assessments would include:

  • Cayman Islands
  • Isle of Man
  • Bermuda
  • Australia
  • Canada
  • Japan

ESMA was formally requested by the European Commission in December 2015 to:

  • carry out an assessment of this second tranche of countries
  • revisit the earlier July 2015 findings where no definitive views had been provided
  • assess the capacity of all 12 non-EU supervisory authorities and their track record in ensuring effective enforcement.

ESMA has now published its advice (ESMA 2016/1140). ESMA maintains its favourable view of Guernsey, Jersey and Switzerland and adds both Canada and Japan to that list. An opinion on Bermuda and the Cayman Islands is on hold as both countries are in course of implementing new regulatory regimes.

The report is also largely favourable to Hong Kong and Singapore (although it does draw attention to the fact that both jurisdictions only facilitate the access of UCITS from certain, but not all, Member States to retail investors) and to Australia provided that ASIC extends the ‘class order relief’ to all Member States.

The situation is not so rosy for the Isle of Man (it has no AIFMD-like regime in place so making it difficult to assess whether the investor protection criterion is met) or for the US. Although no significant obstacles were found, the report does comment that extension of the passport regime to the US could result in an uneven playing field in that the market access conditions for US funds would potentially be less onerous than the conditions that would be placed upon EU funds in the US.

The advice within the ESMA report will now have to be considered by the European Parliament, the Council and the Commission.

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