The Guernsey Financial Services Commission (GFSC) has released a new set of rules which form an opt-in regulatory regime of measures equivalent to the Alternative Investment Fund Managers Directive (AIFMD).
The AIFMD Rules, 2013 have been published on the GFSC’s website and take effect from 2 January 2014.
Fiona Le Poidevin (pictured), chief executive of Guernsey Finance – the promotional agency for the island’s finance industry, says: “The introduction of the opt-in regime means that we have another piece of the jigsaw in place to ensure that Guernsey funds can continue to be distributed to both EU and non-EU countries in the future.”
Guernsey is not in the European Union (EU) and therefore considered a third country for the purposes of AIFMD.
In response to AIFMD and to cater for its global client base, Guernsey has adopted a dual regime where there are two parallel regulatory regimes for investment funds: the existing regime remains in place for managers and investors not requiring an AIFMD fund, including those using EU national private placement regimes and those marketing to non-EU investors; and an opt-in regime which is fully compliant with AIFMD.
Le Poidevin says: “Third countries are not required to implement an AIFMD equivalent regime until the third country passport becomes available in 2015, but we felt that it was important to provide Guernsey managers and depositaries with certainty as soon as possible. It is therefore very pleasing that we have been able to publish the rules now and will have them effective from the start of 2014.
“Of course, many of our clients will continue to use our existing regulatory regime based on a commercial preference either to access the EU through national private placement regimes – which is expected to continue until 2018 – or because they are not marketing to EU investors.”
The GFSC has published its AIFMD rules following two periods of consultation, the second of which started in September.
Speaking at an event last week, Peter Ames, partner at EY in London, said that Guernsey’s dual regime could become a model for other offshore jurisdictions. Such an approach will enable the jurisdiction “to cater for investors that are completely outside the EU and have no interaction with AIFMD at all,” he said.
“The Directive will inevitably impose additional costs on in-scope funds managed by an AIFM and if you stay outside the regime, principally if you’re not marketing to Europe, it’s helpful to have a regime that allows you to do that. Equally, if you do want to market to Europe it is helpful to have a regime, which is respected as the same standard as Europe and you can market when passporting for such non-EU funds comes on stream.”
Le Poidevin says: “Our dual regime provides clients with real options in structuring their investment funds so that they can best meet commercial objectives as well as investor demands, and industry practitioners are reporting a growing number of enquiries from those who are wishing to take advantage of the solutions Guernsey can provide.”
Latest figures from the GFSC show that the net asset value of investment funds under management and administration in Guernsey reached GBP286bn at the end of June 2013 – an increase of GBP15.2bn (5.6 per cent) on a year previous.