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  3. Guernsey Signs 27 AIFM Agreements

Guernsey Signs 27 AIFM Agreements

by Phillip Morton, Investors

18 July 2013

The Guernsey Financial Services Commission (GFSC) has signed bilateral cooperation agreements with 27 securities regulators from the European Union (EU) and the wider European Economic Area (EEA), including the United Kingdom (UK), France and Germany.

The cooperation agreements provide a set of arrangements for the on-going supervision of alternative investment funds, including hedge funds, private equity and real estate funds. They are applicable from Monday July 22, 2013, which is the deadline for EU countries to transpose the provisions of the Alternative Investment Fund Managers Directive (AIFMD) into national law.

The co-operation arrangements include the exchange of information, cross-border on-site visits and mutual assistance in the enforcement of respective supervisory laws. This co-operation will apply to Bailiwick of Guernsey alternative investment fund managers (AIFMs) that manage or market alternative investment funds (AIFs) in the EU and to EU AIFMs that manage or market AIFs in the Bailiwick of Guernsey. The arrangements also cover co-operation in the cross border supervision of depositaries and AIFMs’ delegates. The agreement will take the form of a Memorandum of Understanding (MoU) between the national securities supervisors in EU countries and the GFSC.

The key elements of the EU-Guernsey cooperation arrangements are:

  • EU and Guernsey supervisors will be able to supervise fund managers that operate on a cross border basis in the Bailiwick and the EU;
  • The co-operation between the authorities includes the exchange of information, cross border, onsite visits and assistance in the enforcement of the respective laws;
  • EU authorities will be able to share relevant information received from the GFSC with any of the 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 in the AIFMD for allowing managers from third countries to access EU markets or perform fund management by delegation from EU managers; and
  • The EU-Guernsey co-operation arrangements are applicable from July 22, 2013 and enable cross-border management and marketing to professional investors of alternative investment funds.

These agreements mean that Guernsey funds will continue to be able to receive investments from appropriately qualified investors in all these EU countries through those countries’ private placement regimes, subject to completion of the notification procedure of the national securities supervisor. Had these agreements not been reached it would have become markedly more difficult for Guernsey funds to raise money from investors in all these European countries, adversely affecting Guernsey’s investment businesses.

Carl Rosumek, Director of Investment Supervision and Policy at the Guernsey Financial Services Commission, said:

“I am pleased that, we are able to confirm that the Commission has signed 27 co-operation agreements allowing collective investment schemes and AIFMs in Guernsey the opportunity to commence the process of registering with the relevant EU/EEA securities regulators in these jurisdictions. The completion of these arrangements is a positive endorsement of the Commission. The Commission looks forward to working with these EU/EEA securities regulators in the cross-border supervision of the funds industry.”

Fiona Le Poidevin, Chief Executive of Guernsey Finance, the promotional agency for the Island's finance industry, said: "It is great news that the GFSC has signed so many of these cooperation agreements in advance of July 22 and especially that they include the major economic powers of the UK, France and Germany, where there are such strong links with our funds industry.

"This ensures that, subject to the completion of procedures with national security supervisors, Guernsey-based managers will continue to have access to the EU market through the existing NPP regimes for the immediate future. It also means that we have cleared the next hurdle towards introducing our dual regulatory regime."

Guernsey is introducing a dual regulatory regime to ensure that it can continue to service both EU and non-EU business once AIFMD comes into effect. There will be the continuation of the existing Guernsey regime for those who fall completely outside the scope of AIFMD (non-EU business); and the maintenance of the current process for those who are able to take advantage of NPP regimes for accessing EU markets. In addition, there will be a full AIFMD equivalent opt-in offering for those EU investors and managers who need or choose to take this route.

Miss Le Poidevin added: "We believe that introducing this regime will leave Guernsey uniquely positioned in being able to service both EU and non-EU business from a jurisdiction which is in the European time zone but not part of the EU. This reflects the fact that we are meeting the needs of our truly global client base."

Consultation is expected shortly on the full AIFMD equivalent opt-in rules which Guernsey will introduce in due course. These rules should allow bilateral marketing of an AIF product to certain EU Member States prior to the implementation of a third country passport regime. The European Commission is expected to implement the full passporting regime for non-EU managers of alternative funds (AIFMs) in July 2015. However, in the meantime, Guernsey managers will continue to be able to access the EU markets under the NPP regimes as a result of the cooperation agreements that have been signed.

TAGS: Finance | investment | business | private equity | European Commission | law | investment funds | hedge funds | Guernsey | United Kingdom | enforcement | agreements | France | Germany | alternative investment | European Union (EU) | Investment | Europe | Invest | Investment

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