In an official advice to the European Commission, which was published today, Esma says investor protection, market disruption, competition and the monitoring of systemic risk in the seven fund domiciles are all up to EU standards. The European Commission, Council and Parliament, which decide on extending passporting rights to financial centres outside the EU, will now consider Esma’s advice.
“The impact of granting fund passporting rights would be positive for us, as it streamlines access to the EU” commented Mariana Enevoldsen, director of Heritage International Fund Managers, which provides fund managers with fund administration services from the island of Guernsey. “However, the news is also a bit disappointing, as no timetable has been set for the granting of passporting rights.” A year ago, Esma already gave a similar positive advice for Guernsey and Jersey only, which means that for these two jurisdictions, todays’ announcement didn’t really change anything.
The advice by the regulator suggests that alternative investment funds domiciled in the UK would retain passporting rights post-Brexit. Since the UK has, up until now, implemented all relevant EU legislation, it should expect a positive advice from Esma.
Esma’s advice only concerns funds regulated under the AIFMD. It doesn’t concern Ucits fund. However, the regulator’s stance implies it is theoretically possible to extend passporting rights to jurisdictions outside the European Economic Area. That in itself must give the Brexiteers come hope they could secure fund passporting rights for Ucits funds after leaving the European single market.