ESMA promotes global supervisory co-operation on alternative funds
The European Securities and Markets Authority (ESMA) has approved co-operation arrangements between EU securities regulators, with responsibility for the supervision of alternative investment funds (AIFs), including hedge funds, private equity and real estate funds, and 34 of their global counterparts.
ESMA has negotiated the agreements on behalf of all 27 EU member state securities regulators as well as the authorities from Croatia, Iceland, Liechtenstein and Norway.
These co-operation arrangements are a key element in allowing EU securities regulators to supervise efficiently the way non-EU alternative investment fund managers (AIFMs) comply with the rules of the Alternative Investment Fund Managers Directive (AIFMD), and are a pre-condition in allowing non-EU AIFMs access to EU markets or to perform fund management activities on behalf of EU managers.
These arrangements will apply to non-EU fund managers that manage or market AIFs in the EU and to EU fund managers that manage or market AIFs in third countries. The arrangements also cover co-operation in the cross-border supervision of depositaries and AIFMs’ delegates.
The arrangements, which will apply from 22 July, will facilitate the exchange of information, cross-border on-site visits and mutual assistance in the enforcement of the respective supervisory laws.
Steven Maijoor (pictured), ESMA chair, says: “The approval by EU securities regulators of these co-operation arrangements is a significant step towards the successful implementation of the supervision of alternative investment funds by the July 2013 deadline, and their negotiation is a key achievement for ESMA in its co-ordinating role for EU securities markets.
“The agreements set high standards for co-operation on the supervision of cross-border alternative funds, thereby strengthening investor protection and the global consistency of supervision.”
ESMA’s board of supervisors, at its 22 May meeting, approved memoranda of understandings (MoUs) with 34 regulators, including jurisdictions such as the USA, Canada, Brazil, India, Switzerland, Australia, Hong Kong and Singapore. ESMA continues to negotiate MoUs with further third-countries in order to meet the 22 July deadline.
The key elements of the cooperation arrangements are:
• EU and non-EU authorities will be able to supervise fund managers that operate on a cross-border basis both within the EU and outside;
• The co-operation between authorities includes the exchange of information, cross-border on-site visits and assistance in the enforcement of the respective laws;
• EU securities regulators will be able to share relevant information received from non-EU authorities with 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 of the AIFMD for allowing managers based outside the EU to access EU markets or perform fund management by delegation from EU managers; and
• The co-operation arrangements are applicable from 22 July 2013 and enable cross-border management and marketing to professional investors of alternative investment funds.
While ESMA has negotiated the MoUs centrally, they are bilateral agreements that must be signed between each EU securities regulator and the non-EU authorities. The actual supervision of AIFMs lies with the national securities regulators, therefore each authority decides with which non-EU authorities it will sign an MoU.
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