Hedgeweek: EU and Swiss regulators to cooperate on cross-border supervision of alternative investment funds

04 December 2012

The European Securities and Markets Authority (ESMA) has approved the cooperation arrangements between the Swiss Financial Market Supervisory Authority and the EU securities regulators for the supervision of alternative investment funds, including hedge funds, private equity and real estate funds.

The cooperation arrangements include the exchange of information, cross-border on-site visits, and mutual assistance in the enforcement of the respective supervisory laws. This cooperation will apply to Swiss alternative investment fund managers (AIFMs) that manage or market alternative investment funds (AIFs) in the EU and to EU AIFMs that manage or market AIFs in Switzerland. The agreement also covers cooperation in the cross-border supervision of depositaries and AIFMs’ delegates. The agreement will take the form of a Memorandum of Understanding (MoU) between the EU securities supervisors and FINMA.

The key elements of the EU-Swiss cooperation agreement are:

The content of the memorandum of understanding follows the IOSCO Principles on Cross-Border Supervisory Cooperation of 2010, and complements the terms and conditions of the IOSCO Multilateral MoU Concerning Consultation and Co-operation and the Exchange of Information of 2002.

ESMA is currently in contact with other non-EU authorities that are members of IOSCO, and is continuing to negotiate cooperation arrangements with the relevant authorities with a view to having these in place before July 2013.  According to the AIFMD, the fund industry from a non-EU country whose securities regulator does not have such cooperation arrangements in place by July 2013 will not be permitted to offer or manage AIFs in the EU.

The MoU with FINMA is consistent with the Regulation implementing the AIFMD that the European Commission is expected to adopt shortly, and does not pre-empt the EU Parliament and Council’s right to object to the Regulation.  If the implementing Regulation was to be amended, ESMA would review this and any other MoU accordingly.

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