On 30 July 2015 the European Securities and Markets Authority ("ESMA") released some advice with respect to a selected group of third countries to the European Parliament, the Council and the Commission on the possible extension of the AIFMD passport to apply to third country AIFMs and AIFs and its opinion on the functioning of the passport for EU AIFMs and the national private placement regimes.
ESMA's advice is a condition for the introduction of the passport by the Commission which generally shall occur within three months following receipt of the advice. Such passport means on the one hand that the third country manager gets an authorization to market funds in Europe (and to manage EU funds) without having to comply with national requirements provided it complies fully with all AIFMD rules and on the other hand such introduction of the passport for third country managers will have the automatic effect in Germany of abolishing the national notification regime (sometimes also referred to as private placement regime). Third country managers could then no longer market in Germany unless they are fully AIFMD compliant. The impact of ESMA's advice is therefore important.
However, in its publication on Thursday, ESMA has not given general advice on third countries, but has instead conducted a country-by-country assessment of only six jurisdictions with respect to the main regulatory issues to be considered, namely investor protection, competition, potential market disruption and the monitoring of systemic risk.
The AIFMD provides that the Commission shall adopt a delegated act within three months following receipt from ESMA of its positive advice and opinion. But because the advice only includes a few countries ESMA has suggested that the Commission should wait to extend application of the passport until ESMA has delivered positive advice on a sufficient number of third countries, so as to avoid any adverse market impact that could be caused by a decision to extend application of the passport to only a few third countries. ESMA does not give any guidance as to when its advice is considered to be on a sufficient number of countries so that timing for the introduction of the passport is currently open.
Summary of ESMA Advice
Having performed a country-by-country assessment of Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the United States on the relevant regulatory issues, ESMA concludes that no obstacles exist to the extension of...