Cayman Finance has welcomed an announcement by the European Securities and Markets Authority that the European regulator will soon begin an assessment of the Cayman Islands for its inclusion in the passport regime under the EU Alternative Investment Fund Managers Directive.
The passport enables Cayman-registered and other non-EU alternative investment fund managers and funds to be marketed across the European Union.
ESMA Chairman Steven Maijoor reported to the Economic and Monetary Affairs Committee at the European Parliament on Oct. 13 that the European securities market regulator is focusing its efforts on three key areas in the short term.
They are to conclude whether to extend the passport regime to Hong Kong, Singapore and the United States; to start to assess a second group of six non-EU countries, including the Cayman Islands; and to put in place the extensive framework to govern the AIFMD passport regime in the event that the AIFMD passport is successfully extended to non-EU countries.
Cayman Finance said it is encouraged by ESMA’s imminent assessment of the Cayman Islands, which is home to a significant proportion of non-EU investment funds being marketed within Europe.
Jude Scott, CEO of Cayman Finance, said Cayman Finance is committed to supporting the investment funds industry, the Cayman Islands government and the Cayman Islands Monetary Authority in the course of ESMA’s assessment process.
“With the implementation of new opt-in AIFMD regulatory regimes for investment fund managers and investment funds – both of which are compliant with the requirements of AIFMD – we are optimistic of a positive advice being given by ESMA in respect of the Cayman Islands prior to the AIFMD passport framework being put in place and therefore the continuing prominence of the Cayman Islands within the European funds industry,” Mr. Scott said.
Cayman had already entered into the necessary cooperation arrangements with the major EU investment securities regulators and concluded information exchange agreements with EU governments as required by the AIFMD.
At the end of July, ESMA issued its recommendation on the potential extension of the passports under the Alternative Investment Fund Managers Directive to non-EU alternative investment fund managers and funds.
The first set of assessments resulted in advising that the passport should be extended to Guernsey and Jersey, and subject to the enactment of pending legislation to Switzerland. At the same time, a decision with respect to Hong Kong, Singapore and the United States was deferred.
The Cayman Islands was listed as one of 22 jurisdictions identified by ESMA as both a domicile of non-EU managers who market funds in the EU and non-EU funds marketed in EU member states.
ESMA has taken a country-by-country approach to its assessment of third countries rather than assessing them as a single block, and ESMA plans to conduct all assessments on the basis of the comprehensive assessment methodology by which it evaluated the first six countries to be assessed.