In its response to the first draft of the European Securities and Markets Authority’s advice to the EC, the IMA said that of particular concern is the “re-introduction of an ‘equivalency’ requirement when delegating investment or risk management to non-EU entities, or in relation to depositaries in non-EU jurisdictions”.
Julie Patterson, director at the IMA, said: “ESMA’s proposed equivalency requirements would create a fortress around Europe and go against the interests of EU investors and the political consensus at Level 1.
“The extensive AIFMD Level 1 debate on delegation concluded that a requirement for equivalency of regulation of non-EU entities was unworkable and undesirable. Even in highly-regulated jurisdictions, it is not possible to find an equivalent provision for every EU requirement. Therefore, equivalency could have the unintended consequence of closing off investment in non-EU jurisdictions for EU institutions wishing to invest via alternative investment funds.”
Patterson added that the IMA has similar concerns about third country depositaries.
“AIFMD Level 1 recognises that contractual measures can be used to provide the same level of investor protection,” she said.
“We agree that EU and non-EU alternative investment funds should compete on a level playing field. That is why AIFMD Level 1 and the Commission’s request to ESMA refer to regulation having the ‘same effect’. We urge ESMA to review its draft advice to ensure the rules are workable.”
