ESMA Draws Up Proposed AIFMD Passport Questions For Regulators

The European Securities and Markets Authority has issued on March 26 technical advice regarding information that must be provided by national regulators on the functioning of the Alternative Investment Fund Managers Directive as a precursor to the potential extension of the AIFMD passport to non-EU managers and funds after July next year.

ESMA has drawn up the report in response to a request from the European Commission on December 20 last year for advice on the possible content of its delegated act required under Article 67(5) of the AIFMD on the information regulators must provide quarterly to ESMA, and was delivered a month ahead of the Commission's deadline of April 30.

The information to be provided by the national regulators will enable ESMA to advise the Commission on the planned opening up of the passporting system, which will become possible two years after the directive took effect on July 22, 2013 – the date from which, according to the directive, the regulators were originally due to begin providing information to ESMA.

The information concerns the functioning of the passport for EU alternative fund managers and of national private placement regimes for non-EU managers and funds, as well as issues arising from the functioning of both systems. ESMA says the input will enable it to co-operate closely with the European Commission to facilitate the rapidadoption of a delegated act extending the AIFMD passporting system.

The questions that ESMA proposes that national regulators answer include the number of managers authorised under the AIFMD, the number that are using the passport for managing or marketing funds in other member states, and that have set up cross-border branches, cases arising of rule breaches or misconduct by managers using the passport, and their outcomes, the functioning of co-operation arrangements and cross-border notification between national regulators, cases relating to systemic risk, and similar information relating to the distribution by private placement of non-EU funds or of EU funds run by non-EU managers.

The information to be requested on the functioning of the two systems includes any evidence of market disruption or distortion of competition between EU and non-EU managers, and of any difficulties faced by managers in established themselves or marketing their funds in other EU countries, or problems that have deterred managers from doing so.

The directive lays down that by July 22, 2015, ESMA should...