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Guernsey extends market access to EU countries under AIFMD

10 September 2015

Guernsey has extended market access to EU Alternative Investment Fund Managers (AIFMs) and Alternative Investment Funds (AIFs) doing business in Guernsey.

The move follows the European Securities and Markets Authority (ESMA)'s advice to the European Council, the European Commission and the European Parliament that the EU Alternative Investment Fund Managers Directive (AIFMD) passport should be extended to Guernsey.

Guernsey's Government, the States of Guernsey, has now amended its Investor Protection regulations for AIFMs and AIFs based in EU Member States that have fully implemented AIFMD in order to enable easier movement between Guernsey and EU markets.

Guernsey's Chief Minister, Deputy Jonathan Le Tocq, said: "When I met with EU Capital Markets Commissioner Hill in May, I set out Guernsey's commitment to supporting free movement of capital and trade. Our amendment to Investor Protection regulation extends Guernsey market access to EU AIFMs - a move that is both sensible and is a further demonstration of that commitment."

Guernsey Finance Chief Executive, Dominic Wheatley, said industry welcomed both the recent ESMA recommendation and the amendment to the Island's Investor Protection regulations.

"This move by Guernsey's government to reciprocate market access under AIFMD is a clear demonstration of a belief in the benefits of increased trade and competition in the funds sector across the EU that the AIFMD passport facilitates.   The Guernsey funds sector is international, highly professional and well-regulated. A 2015 report by KPMG, International Capital Flows, analysed the economic benefits provided to the European economy by the Guernsey funds sector and demonstrated that Guernsey was a well-regulated conduit for €130 billion of funds into the EU - half of which is drawn from outside of Europe.

"These funds are invested in supporting economic growth and supporting jobs in businesses ranging in size from small and medium-sized enterprises up to multi-national businesses. Guernsey infrastructure funds, including a hub of renewable funds, assist with supporting key EU government objectives by facilitating the construction and management of €6.5 billion of key infrastructure assets across Europe, as well as investing in renewable energy projects."

ESMA published its advice in relation to the application of the AIFMD passport to non-EU AIFMs and AIFs on 30 July. It concluded that no obstacles exist to the extension of the passport to Guernsey and Jersey, while Switzerland will remove any remaining obstacles with the enactment of pending legislation. No definitive view has been reached on the other three jurisdictions due to concerns related to competition, regulatory issues and a lack of sufficient evidence to properly assess the relevant criteria.

Guernsey's AIFMD regime was one of the first to be introduced by a third country regulator. The Guernsey Financial Services Commission (GFSC) has since signed bilateral co-operation agreements with 27 EU/EEA securities regulators for the supervision of AIFs following ESMA's approval of the arrangements in July 2013.  

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