AIFMD passporting “short term priority” for ESMA

The European regulator expects to advise on whether or not to extend the Alternative Investment Fund Manager’s Directive passport to Bermuda and the Cayman Islands “in the short term”, but is unable to give a firm deadline for its decision.

Addressing the European Parliament’s Economic and Monetary Policy committee on Tuesday, ESMA head Steven Maijoor said the watchdog is continuing to assess the case for extending the passport to the two British overseas territories with a view to reaching a definitive conclusion soon.

But ESMA was not able to comment more specifically on the timing of the decision at the time of writing.

Both territories are in the process of implementing widespread financial reforms designed to bring their laws in line with those of Europe, to facilitate the application for a passport (see pfm 10 October).

Three point plan

As a second priority, ESMA will also start assessing the eligibility for an AIFMD passport of a third group of non-EU countries in the short term, Maijoor told the committee.

“[This will begin] when we have more clarity on the next steps envisaged by the co-legislators,” he added.
To-date the regulator has delivered advice on two groups of countries, the first in July and the second in September. Among those that were given the green light were Canada, Guernsey, Japan, Jersey and Switzerland.

Its third short-term priority is to put in place the regulatory framework required in the case the passport is extended to one or more non-EU countries.

“This includes making preparations for the significant role for ESMA in the functioning of the passporting system and the strengthened supervisory cooperation that will be crucial to its success,” Maijoor said.
Ultimately the decision as to whether or not to grant an AIFMD passport to non-EU countries lies with the European Commission, which is in charge of drafting all European law proposals.

Theoretically it has three months from the delivery of advice from ESMA in which to make a decision, and in the case of the countries that have already been assessed this would be December (see pfm 30 September).

But this could be extended if lawmakers require more information.