ESMA has published its advice in relation to the application of the AIFMD marketing passport to non-EU AIFMs and AIFs. In opting for a country-by-country assessment of the potential extension of the marketing passport, ESMA was of the view that there was only a sufficient level of information available on six jurisdictions; namely the US, Guernsey, Jersey, Hong Kong, Switzerland and Singapore.

ESMA concluded that “no obstacles exist to the extension of the passport to Guernsey and Jersey, while Switzerland will remove any remaining obstacles with the enactment of pending legislation. No definitive view has been reached on the other three jurisdictions due to concerns related to competition, regulatory issues and a lack of sufficient evidence to properly assess the relevant criteria.”

However, ESMA has also stated that as it does not have sufficient information in relation to many other non-EU jurisdictions in order to make a substantive assessment, “the institutions may wish to consider waiting until ESMA has delivered positive advice on a sufficient number of non-EU countries, before introducing the passport in order to avoid any adverse market impact that a decision to extend the passport to only a few non-EU countries might have.” 

Next steps

ESMA’s advice has been sent to the European Commission, Parliament and Council so they can each consider what action to take.

ESMA has indicated that it intends to assess further groups of non-EU domiciles with a view to delivering advice at a later stage. ESMA intends to continue this work until it has provided advice on all the non-EU domiciles that it considers relevant for the purposes of the AIFMD passport.

ESMA’s advice will undoubtedly be a blow for a number of non-EU domiciles hoping for a positive opinion from ESMA in relation to the passport being extended sooner rather than later.  Indeed, the approach taken would suggest that non-EU managers looking to access European assets in the medium to short-term may need to re-consider their options, in particular with regard to their “offshore” product ranges.