A Post AIFMD World

September 10, 2013

By Geoff Cook, CEO, Jersey Finance

After years of build-up and months of analysis, the long awaited EU Alternative Investment Fund Managers Directive (AIFMD) has now finally been introduced.

With EU countries bringing the AIFMD into national law at varying paces, hedge fund managers are still establishing exactly what the detail of the AIFMD means to them. From a jurisdictional point of view, they clearly require three things - certainty about being able to market into Europe; flexibility in how their funds are managed should they wish to target non-European markets; and confidence in the ability to effectively and appropriately service their funds.

As far as Jersey is concerned, thanks to the significant amount of hard work that has gone into gearing up for AIFMD, it is very much business as usual for hedge fund managers. In fact, as the dust settles on the introduction of AIFMD, it could be argued that Jersey, as a non-EU country but immersed in the European funds industry, is even better placed now as a result of the regulation.


First and foremost, Jersey is focused on offering hedge fund managers a long-term stable environment. Having signed 27 bilateral cooperation agreements with EEA countries including the UK and Germany, Jersey’s regulator (the Jersey Financial Services Commission) is already granting licenses for fund managers enabling them to continue to access EU markets through private placement arrangements.

In addition, new regulations introduced in Jersey in April this year to mirror EU requirements also allow for the creation of an ‘opt-in regime’ for managers wishing to comply fully with AIFMD requirements in marketing to European investors. This essentially means that Jersey has already implemented, ahead of time, the necessary mechanics in order to be able to support an EU-wide AIFMD marketing passport, anticipated to become available for non-EU fund managers in 2015. This is not something that can be said for other IFCs.

The issue of ‘substance’ under AIFMD has also become a point of debate for hedge fund managers. In Jersey, there is already a regulatory requirement for Jersey entities to demonstrate substance, and so-called letterbox arrangements that might be found elsewhere are certainly not part of the model in Jersey regulated fund structures.

In fact, Jersey’s knowledge of the alternative asset sector, including its experience in asset servicing, tax and accounting, means that hedge fund managers should take confidence in Jersey having all the ingredients to more than satisfy the AIFMD’s criteria for management substance.

This is backed-up further by the immediate availability of a fully compliant depositary regime and infrastructure of institutional and independent depositary service providers.


Meanwhile, hedge fund managers are not only targeting the EU investor market but are adopting global strategies targeting growth markets around the world. With this in mind, using a non-EU but European time-zone jurisdiction that has expertise in handling non-European hedge fund business, such as Jersey, is attractive.

By offering a completely separate funds regime that lies outside the scope of the AIFMD, Jersey is providing managers with a welcome degree of flexibility, enabling those who don’t want to access EU capital to market their funds to the rest of the world using Jersey’s familiar range of structures.

We are already seeing this flexibility putting Jersey in something of a unique position, with promoters establishing management entities in Jersey and from one location meeting all EU requirements while also serving the rest of the world in a non-AIFMD compliant environment. Offering both is not available in EU Member States or in all IFCs.

With AIFMD now very much part of the hedge fund landscape, initial indications are that Jersey is maintaining favour with hedge fund managers thanks to a fund regime that offers both flexibility and certainty.

This article was first published in HFMWeek on 10th September 2013.