NPPRs preferable over AIFMD passport, panel says

National private placement regimes (NPPR) continue to offer greater flexibility and ease of access for GPs marketing into Europe under the Alternative Investment Fund Managers Directive (AIFMD) than attempting to obtain a pan-EU passport, according to panelists at a masterclass hosted by Guernsey Finance in conjunction with the Guernsey Investment Fund Association (GIFA).

“I’ve had a lot of experience of non-EU managers who are pleasantly surprised to find that access to Europe and, in particular, to the UK is not closed and they can access European markets without having to become registered under AIFMD,” said Cathy Pitt, corporate partner of CMS Cameron McKenna.

Marketing and premarketing concepts are often different in each member state, despite the fact that the passport is supposed to be harmonized, noted Pitt. Fellow panelist Rebecca Gordon, general counsel of Liberum Capital, agreed that the lack of harmonization in the passport rules is an issue.

“Some of the stories we hear, and some of the experiences we’ve had, have not been particularly positive either. I think that, whilst you have a harmonized set of rules, some of the countries are actually interpreting those rules slightly differently – they’re sort of applying different charges. Then, obviously, when you’re marketing into those jurisdictions you have still got to also think about the other legislation, the local legislation that might be applicable as well,” said Gordon.

“The passport isn’t necessarily as smooth as it might be, and I think ESMA acknowledged that in the response for their call of evidence. It was one of the issues that I think they’re planning to address because, obviously, the intention was that the passport should be a harmonized process,” added Pitt.

The European Securities and Markets Authority (ESMA) is expected to complete its assessment of whether nine countries are eligible to seek a pan-EU marketing passport by June 30.

Last July, ESMA deemed Guernsey, Jersey and Switzerland fit to receive AIFMD passports. ESMA began its second wave of reviews last October, assessing the Cayman Islands, Japan, Isle of Man, Bermuda, Canada and Australia in addition to the US, Hong Kong and Singapore.

The European Commission is expected to produce another opinion on the functioning of the passport and NPPR once AIFMD is fully transposed in all member states and there is more experience on the functioning of the framework.