U.S., Cayman Islands face wait for EU green light on hedge funds
By Huw Jones
LONDON (Reuters) - Asset managers from two of the world's top hedge fund centres, the United States and Cayman Islands, must wait another five months to find out if they can continue marketing themselves to European Union investors, prolonging uncertainty in the sector.
A new EU law requires the bloc's European Securities and Markets Authority (ESMA) to say for the first time whether hedge fund and private equity rules in non-EU countries are as strict as those in the 28-country bloc.
A positive view means that asset managers based outside the EU would be given a "passport" to continue marketing themselves across Europe, replacing a system of country-by-country private placement authorisation.
The European Commission takes the final decision on whether a passport is granted in a lengthy process that has created uncertainty in the sector.
In July, ESMA said it could not at the time give a view on the United States, one of the world's biggest hedge fund centres, as it had concerns over competition - triggering speculation that no passport will be granted any time soon.
It also lacked information on Hong Kong and Singapore, but Jersey, Guernsey and Switzerland were given the green light.
ESMA Chairman Steven Maijoor told the European Parliament's economic affairs committee on Tuesday that assessments on all three continue, as well as on a second batch of countries including the Cayman Islands, where most non-EU hedge fund managers are based.
"In principle we should be able to meet the March deadline for next year," Maijoor said.
The industry wants ESMA to speed up its work.
Maijoor said granting a passport would also allow the much bigger "bread and butter" mutual funds sector from non-EU countries to operate in the 28-country bloc as well.
"So in principle, the impact is quite substantial. This is not about a few hedge funds or a few private equity funds," Maijoor said.
Granting passports should start a three-year countdown to the expiry of the national authorisation regime, raising issues of timing if some countries obtain passports well before others.
A European Commission official told the meeting that the EU executive would think of how to "stagger" its assessment of when the national regimes should expire, saying it was not automatic that they would be switched off after three years.
(Reporting by Huw Jones; editing by Adrian Croft)
