On 19 July 2016, the European Securities and Markets Authority (ESMA) published its latest advice to the European Parliament, the European Council and the European Commission on the application of the Alternative Investment Fund Managers Directive (AIFMD) passport regime to asset managers and investment funds domiciled in non-EU countries.
For each of the countries being assessed by ESMA, consideration is given to whether there were significant obstacles to applying the AIFMD passport regarding investor protection, competition, market disruption and the monitoring of systemic risk.
For Bermuda and Cayman ESMA confirmed its view that there are no significant obstacles regarding competition and market disruption impeding the application of the AIFMD passport to those jurisdictions. ESMA has however delayed giving definitive advice in relation to the extension of the AIFMD passport to Bermuda and Cayman on the grounds that both countries are in the process of implementing new AIFMD-like regulatory regimes which will need to be assessed to determine whether they satisfy the criteria on investor protection and effectiveness of enforcement.
For now, it is business as usual for AIFs and AIFMs in non-EU countries, including Bermuda, BVI and Cayman, who must continue to comply with NPPRs in each EU Member State they wish to market into, which will be available until at least July 2018. We expect that when AIFMD passporting is extended, Bermuda, BVI (which is following the lead of the Cayman Islands in preparing for ESMA's assessment) and Cayman are likely to be included in the list of approved third countries.
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