A few days ago, Liechtenstein announced that after a rather significant delay it is finally able to offer its Alternative Investment Fund Managers (AIFMs) and their Alternative Investment Funds (AIFs) access to the EU passport system provided by the EU Alternative Investment Fund Managers Directive (AIFMD). Where does Switzerland stand in this regard?
As a non-EU country, Switzerland can only hope to gain competitive third country access based on regulatory equivalence. In recognition of this principle, Switzerland has made great efforts to align its relevant regulatory framework with the new rules created by the AIFMD by partially revising its Collective Investment Schemes Act (CISA) and associated ordinances.
Last year, the European Securities and Markets Authority (ESMA) evaluated a number of countries (including Switzerland) to form an opinion as to whether the AIFMD passport should be extended to these countries as required by the AIFMD. In July 2015, ESMA published its Advice on the application of the AIFMD passport in six non-EU countries (Guernsey, Hong Kong, Jersey, Switzerland, Singapore and the USA). In this document, ESMA finds no major obstacles for the cases of Switzerland, Jersey and Guernsey. But rather than at least grant the passport to these three countries, ESMA was tasked with assessing an additional six countries to determine whether there are significant obstacles regarding investor protection, competition, market disruption and the monitoring of systemic risk which would impede the utilisation of the AIFMD passport.
On 19 July 2016, ESMA published a second opinion on the extension of the AIFMD passport to non-EU countries. In it, ESMA finds, in particular, that there are only minor obstacles impeding the application of the AIFMD passport in Canada, Guernsey, Japan, Jersey and Switzerland. Additional comments and qualifications were provided with respect to Hong Kong, Singapore, Australia and the USA. For Bermuda and the Cayman Islands, ESMA was unable to provide definitive advice as these countries are currently in the process of implementing new regulatory regimes. Similarly, ESMA found it difficult to assess the Isle of Man, for currently there is no AIFMD style regime in place there.
ESMA’s Advice will now be considered by the European Commission, Parliament and Council, as required by the AIFMD. Therefore, in essence Switzerland is still waiting to gain access to the EU-AIFMD passport for its AIFMs, which would grant them the ability to offer their services and products competitively across the harmonised EU market. But things are clearly moving forward, and seemingly in the right direction, which is good news for many Swiss players. The AIFMD passport has become even more important to many of these entities following the Brexit vote, for up until now they had relied on the UK for access into the EU.
The Esma advice can be found here.
Please do not hesitate to contact us if you require further guidance or have questions on any of these topics.