The Guernsey Financial Services Commission (GFSC) has signed bilateral cooperation agreements with 27 securities regulators from the European Union and the wider European Economic Area, including the 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 22 July 2013, which is the deadline for EU countries to transpose the provisions of the Alternative Investment Fund Managers Directive (AIFMD) into national law.
AIFMD seeks to regulate EU-based Alternative Investment Fund Managers (AIFMs), managers of EU-established Alternative Investment Funds (AIFs) and managers that market AIFs into the EU.
Non-EU jurisdictions, such as Guernsey, are considered “third countries” and are not required to implement AIFMD. However, for third country AIFMs to continue accessing EU markets post 22 July 2013, their home jurisdiction must either apply measures equivalent to AIFMD or adopt provisions which will enable them to continue to market into the EU through existing National Private Placement (NPP) regimes, which will remain until at least 2015 and potentially to 2018.
Signing these cooperation agreements means that Guernsey funds will continue to be able to receive investments from appropriately qualified investors in all these EU/EEA countries through their NPP regimes, subject to completion of the notification procedure of the relevant national securities supervisor.
Fiona Le Poidevin (pictured), chief executive of Guernsey Finance, the promotional agency for the island’s finance industry, says: “It is great news that the GFSC has signed so many of these cooperation agreements in advance of 22 July 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.
Le Poidevin says: “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.