Third Country Relations and the Equivalence Regime: Treatment of Collective Investment Schemes

Abstract

European legislation on investment funds does not provide for a single coherent third country regime. The UCITS Directive 1985, as one of the earliest directives aiming at financial product harmonisation within the European Union, never contained a third country regime. By contrast, the much younger AIFMD contains an elaborate, staged third country regime: while the first stage is essentially based on access under national private placement regimes subject to certain harmonised minimum requirements, the second stage is based on a ‘third country passport’ obliging third country actors to become fully licensed in an EU member state of reference. Contrary to expectations at the outset of AIFMD, it is questionable whether and when the second phase will be implemented. In the light of the rather cumbersome third country access regime for non-EU fund products and asset managers, delegation of portfolio management by EU-regulated management companies to third country asset managers is an important access path for asset management services into the European Union.