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  • Since AIFMD became effective on July 22nd 2013 the marketing passport has been available only to EU AIFMs managing EU AIFs. It allows them to market their funds to professional investors within the EU. This regime will stay in place until at least July 2015.
  • Non-EU AIFMs cannot currently avail of this marketing passport and must, therefore, rely on National Private Placement Rules (NPPR) or reverse solicitation.

Recent Developments

  • By July 22nd 2015, ESMA1 will make its recommendation to the EU Commission, Parliament and Council on whether to allow non-EU AIFMs to apply for authorisation to market AIFs under the passport system.
  • ESMA can only recommend the passport extension provided there are “no significant obstacles regarding investor protection, market disruption, competition and monitoring of systematic risk”.
  • ESMA issued a call for evidence (the deadline for which was January 8th 2015) and the initial feedback suggests that July 2015 may be too soon to extend the marketing passport:
    • ALFI1 said that autumn 2015 “is not a realistic date for an extension of the AIFMD passport” and that it should be “deferred at least three years until 2018”2
    • IFIA1 noted that it does “not believe sufficient information on the passporting arrangements is available to make an informed decision at the current time”2 .

Our Thoughts

  • It would appear that market participants are still digesting the AIFMD regulations and the new operating environment. Many AIFMs will file their first Annex IV reports in 2015. In many instances, full remuneration disclosure will occur only in 2016.
  • Our experience, in the US particularly, is that many managers have limited appetite for the marketing passport due to their concerns surrounding the compliance costs and remuneration disclosures. Other managers feel the size of the potential market for their products does not warrant the effort.
  • We anticipate that 2018 is a more realistic timeline for the extension of the marketing passport to NonEU AIFMs. This will allow them to continue operating under the NPPR and reverse solicitation frameworks until then. It would further allow ESMA time to collect data and to make a more informed recommendation as regards the next steps.

– ESMA: European Securities and Markets Authority
– ALFI: Association of the Luxembourg Fund Industry
– IFIA: Irish Funds Industry Association
2 Source: Ignites

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