Cayman Islands shunned in AIFMD passport recommendations

ESMA advises on non-EU countries looking for AIFMD passports – essentially recommending nine of the 12.
By Jonathan Watkins

The Cayman Islands were among three non-EU countries European regulators won’t be recommending as having equivalent regulatory schemes under AIFMD.

The ruling means that alternative investment funds based their would still not be able to market their funds across Europe.

The European Securities and Markets Authority (ESMA) published advice on 12 countries saying it could see no significant obstacles in nine of them – including Canada, Japan and the US.

ESMA said it could not give definitive advice with respect to the criteria on investor protection and effectiveness of enforcement for the Cayman Island and Bermuda.



For the Isle of Man, ESMA found that the absence of an AIFMD-like regime made it difficult to assess whether the investor protection criterion is met.

Originally designated under AIFMD, the pan EU marketing passport allows managers of EU funds to market them across the EU. Those outside of the EU have to be approved by the European Commission.

Earlier this year, the Commission told ESMA it needed to publish these recommendations by 30 June.

The European regulator decided to opt for a country-by-country assessment of the potential extension of the AIFMD passport, and will continue to assess other non-EU jurisdictions not covered within its initial assessments.

Following ESMA’s recommendations the European Commission will now look at granting formal approval.

While essentially approving the US, ESMA did state that it considers that in the case of funds marketed by managers to professional investors which do involve a public offering, a potential extension of the AIFMD passport to the US risks an un-level playing field between EU and non-EU AIFMs.

“ESMA suggests, therefore, that the EU institutions consider options to mitigate this risk,”the regulator added.

Regarding alternative investments funds in Hong Kong and Singapore, ESMA said that the regimes facilitate the access of UCITS from only certain EU Member States to retail investors in their territories.

Five countries were deemed to have no significant obstacles at all Canada, Guernsey, Japan, Jersey and Switzerland.

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