Bermuda one step closer to AIFM passports


In a decision that will be of interest to hedge-fund backed reinsurers, significant developments have been made in Bermuda’s candidacy for a European passport to facilitate business for Bermuda-based fund managers.

The European Securities and Markets Authority (ESMA) has decided that Bermuda has met three of the five criteria assessed to issue advice on the extension of Alternative Investment Fund Managers (AIFM) passports.

Further review will still be needed on the remaining two assessment criteria for full approval.

In 2015 the European Commission tasked ESMA with reviewing 22 jurisdictions eligible for passporting and a total of 12, including Bermuda, have now been assessed.

Once a jurisdiction is assessed, the European Commission makes the final decision.

ESMA believes there are no significant obstacles impeding the issue of an AIFM passport to Bermuda in relation to standards on competition, market disruption and monitoring of system risk, but more time is needed to review enforcement and investor protection measures.

Jeremy Cox, chief executive officer of the Bermuda Monetary Authority, said: “Efforts towards passporting for alternative investment fund managers effectively began four years ago with the signing of cooperation agreements with the majority of European Union (EU) Member States in relation to the AIFM Directive (AIFMD).

“These agreements constitute a pre-condition for non-EU AIFMs seeking access to EU markets or wanting to perform fund management activities on behalf of EU managers.

“The authority commends ESMA on releasing their detailed report in such a timely fashion and looks forward to demonstrating the strengths of Bermuda’s AIFM regime – notably the recent legislative approval of the Investment Funds Amendment Act which gives the authority additional enforcement powers. We remain fully committed to ESMA’s assessment process because it will benefit Bermuda-based investment managers with products and services for the European fund industry.”

Hedge fund reinsurers, Hedge funds, Insurance, Reinsurance, Bermuda, European Securities and Markets Authority, Europe, Bermuda Monetary Authority

Bermuda Re