ESMA negotiated the agreements on behalf of all 27 EU member state securities regulators as well as the authorities from Croatia, Iceland, Liechtenstein and Norway.
This is a key way of allowing EU securities regulators to supervise efficiently the way non-EU alternative investment fund managers (AIFMs) comply with the rules of the Alternative Investment Fund Managers Directive (AIFMD), and are a pre-condition in allowing access to EU markets.
Two of the non-EU parties to the agreement, Jersey and Guernsey, will now be able to continue to deliver alternative investment funds business, such as hedge funds, private equity and real estate funds, into Europe after the introduction of the AIFMD in July.
Other non-EU jurisdictions which are part of the agreement include the US, Canada, Brazil, India, Switzerland, Australia, Hong Kong and Singapore.
These arrangements will apply to non-EU fund managers that manage or market AIFs in the EU and to EU fund managers that manage or market AIFs in third countries. The arrangements also cover co-operation in the cross-border supervision of depositaries and AIFMs’ delegates.
The arrangements, which will apply from 22 July, will facilitate the exchange of information, cross-border on-site visits and mutual assistance in the enforcement of the respective supervisory laws.
Steven Maijoor, ESMA chair, said: “The approval by EU securities regulators of these co-operation arrangements is a significant step towards the successful implementation of the supervision of alternative investment funds by the July 2013 deadline, and their negotiation is a key achievement for ESMA in its co-ordinating role for EU securities markets.
“The agreements set high standards for co-operation on the supervision of cross-border alternative funds, thereby strengthening investor protection and the global consistency of supervision.”
Geoff Cook, CEO, Jersey Finance, said: “While Jersey’s approach to the Directive will offer a seamless transition when it comes into force in July, it will also offer a welcome degree of flexibility in offering a completely separate regime for fund managers wishing to market to non-EEA countries. This is not something all international finance centres, nor any EU nations, can offer, so in this sense the Directive will actually enhance Jersey’s appeal as a specialist centre for alternative funds business.”
Carl Rosumek, director of investment business at the Guernsey Financial Services Commission, said: “The arrangements will further improve cross-border supervision of the funds industry and ultimately reinforce investor protection in the cross border operations of alternative funds”.
ESMA is continuing to negotiate memorandums of understanding with further third-countries in order to meet the 22 July deadline.
The key elements of the cooperation arrangements are:
- EU and non-EU authorities will be able to supervise fund managers that operate on a cross-border basis both within the EU and outside
- The co-operation between authorities includes the exchange of information, cross-border on-site visits and assistance in the enforcement of the respective laws
- EU securities regulators will be able to share relevant information received from non-EU authorities with other EU authorities, ESMA and the European Systemic Risk Board, provided appropriate safeguards apply
- The existence of co-operation arrangements between the EU and non-EU authorities is a precondition of the AIFMD for allowing managers based outside the EU to access EU markets or perform fund management by delegation from EU managers
- The co-operation arrangements are applicable from 22 July 2013 and enable cross-border management and marketing to professional investors of alternative investment funds
To read a short guide on what financial advisers can gain from the AIFMD, click here.
