The European Securities and Markets Authority has approved seven further framework agreements for co-operation arrangements between European Union securities regulators and global counterparts with responsibility for oversight of alternative investment funds including hedge funds, private equity and real estate funds.
ESMA’s Board of Supervisors has approved additional memorandums of understanding with regulators from five countries, including the US Commodity Futures Trading Commission, ahead of the introduction of the Alternative Investment Fund Managers Directive, which takes effect on Monday, July 22.
ESMA has now negotiated a total of 38 co-operation agreements on behalf of the 31 EU and European Economic Area national regulators responsible for securities markets supervision, after approving 31 MoUs in May. The agreements provide for the exchange of information, cross-border on-site visits and mutual assistance in the enforcement of each jurisdiction’s supervisory laws.
The agreements cover third-country alternative fund managers that market funds in the EU and EU-based managers that manage or market funds outside the EU. The agreements also cover co-operation in the cross-border supervision of depositaries and other providers of outsources services to alternative managers.
EU national securities regulators are in the process of signing MoUs with outside jurisdictions relevant to their market. The existence of co-operation arrangements between EU and non-EU regulators is a precondition for allowing managers from third countries access to EU markets or to perform fund management tasks delegated by EU managers under the AIFM Directive.
Applicable from July, the agreements will allow the cross-border marketing of alternative funds to professional investors in other jurisdictions jurisdictions. In addition, non-EU jurisdiction must not be classified by the Financial Action Task Force as unco-operative on efforts to combat money laundering and the financing of terrorism, and must have co-operation agreements in place with EU member states enabling the exchange of information on tax matters.
The ESMA MoUs follow the IOSCO Principles on Cross-Border Supervisory Co-operation and complement the terms and conditions of the 2002 IOSCO Multilateral MoU Concerning Consultation and Co-operation and the Exchange of Information.
ESMA originally contacted all the regulators that had signed the IOSCO Multilateral MoU and has now approved MoUs with the 42 bodies that responded. It continues to negotiate with the Chinese securities market regulator authority.
The new agreements approved by ESMA are with the Financial Services Agency, Ministry of Economy, Trade and Industry and Ministry of Agriculture, Forestry and Fisheries in Japan, the Securities Commission (Malaysia), National Banking and Securities Commission (Mexico), Securities Commission of the Bahamas, and the CFTC.