Swiss Fund Managers Unperturbed By EU Directive
Tuesday, November 16, 2010

The Swiss Funds Association has welcomed the European Parliament's approval of the Alternative Investment Fund Manager AIFM Directive.

While the SFA notes that there are still numerous legal terms that have to be defined in more specific detail over the coming months, the Association says that compared with the draft presented in April 2009, the directive in its present form contains two significant improvements from the Swiss perspective:

• Under the AIFM Directive there remains the possibility for portfolio management and/or risk management for an Alternative Investment Fund established in the European Union (EU) to be delegated to a Swiss-domiciled manager, provided the latter is subject to FINMA supervision.
• Swiss asset managers may at a later date acquire authorization in respect of marketing in one or more EU member states, or even an EU passport. For this, however, they must comply with comparable requirements to those applicable to EU managers.

In addition to this, Switzerland will also have to meet certain conditions, such as concluding supervisory cooperation agreements and double taxation treaties.

“At this juncture, we believe this will be achievable," commented SFA President Martin Thommen. "This will also require certain amendments to the Collective Investment Schemes Act, which the SFA actively supports. The Swiss authorities responsible should now implement the necessary measures as quickly as possible in close cooperation with the industry associations."

“Even under the AIFM Directive, our country remains an attractive location for asset managers from the hedge fund and private equity sectors," added SFA CEO Dr. Matthäus Den Otter. "For this, however, Switzerland’s advantages as a third country must be harnessed with regulation that remains pragmatic and is oriented towards the reduced need for protection among institutional investors."

The European Parliament (EP) has adopted the directive which will introduce, for the first time, European regulation on the marketing of alternative investment funds (AIF), including hedge funds and private equity.

This is the final hurdle for the directive, whose rules are to take effect by 2013. The European Securities and Markets Authority (ESMA) and the European Commission will now have the considerable task of fleshing out the details of how the directive works, through guidelines and implementing legislation.

Under the directive, a European AIF manager with a portfolio of more than EUR100m (USD136m) will be required to obtain authorization from national authorities to operate. This permit, or ‘passport’ will entitle them to market funds throughout the EU single market, without first having to seek permission from each member state and comply with different national laws.