ESMA: No One-Size-Fits-All-Approach for AIFMD Passporting

Europe’s financial authority says it will not adopt a one-size-fits-all approach to the passport regime of the Alternative Investment Fund Manager Directive (AIFMD) to non-EU funds.

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), said in a speech on Wednesday that it will not treat all non-EU countries as a single block in the context of AIFMD.

“We will not simply say ‘yes, there should be a passport for everyone’. Rather, we will distinguish between the various non-EU jurisdictions taking into account the criteria set out in the AIFMD itself,” he says.

Under the directive all AIFMs have to set up a connection with an EU service provider, prompting depository banks and fund administrators to further extend their solution set; whether that be from regulatory reporting, to providing onshore and offshore depository services.

However, one of the key concerns in the industry is that because there are so many funds outside of the EU, they will be underserved by the limited amount of European service providers.

Furthermore, there are also contrasting passporting rules between some of the key EU member states such as the U.K., Germany, France and the Netherlands.

For example, in Germany a one-off fee is required to set up in that market. Similarly in France the regulator requires the AIFM to submit a programme of its services, an organizational structure of any French branch and a French address, and pay period fees based on assets under management.

Rather in the Netherlands there is no one-off or periodic fees or periodic fees for AIFMD passporting, although a Dutch branch is liable to standard supervisory fees. In the U.K. there are no fees for notifications, and fees for a branch are based on income and funds under management.

For passporting of non-EU firms, there will have to be convergence from all member states on what countries shall be granted access.

“At the moment we are primarily in an information gathering phase,” he adds. “In particular, we are collecting data from the national regulators on the functioning of the EU passport and the national private placement regimes, through which non-EU entities can get access to the markets of the individual member states.”